BANKING
“ Financial services firms should be considering how they prepare for the quantum computing technology that looks certain to transform the market ”
UK FINANCE of all sizes . Quantum computing can perform operations magnitudes quicker , meaning complex financial information – such as the data that goes into assessing credit risk , for example – can be analysed quickly and with more accuracy .
A study published earlier this year by Ernest & Young ( EY ) highlights the complex risk landscape that banks are operating in : it claims that CROs face an extraordinary volume and variety of risks , both traditional and emerging , which all seem to be growing in urgency . Yet their biggest challenge lies in understanding how these risks intersect with each other to create potential points of failure within their organisation , even when traditional risk management metrics look stable .
“ Cyber risk is the top risk priority for the next 12 months , according to CROs ,” the study says . “ But credit risk may soon become more of a focal point if economic conditions worsen .” Clearly , then , this necessitates improved technology to help financial institutions manage the plethora of risks they face on a daily basis . Could quantum banking be a solution ?
First-movers will secure an early advantage Authors of a report from UK Finance previously wrote : “ Quantum computing will have applications across financial services , transforming the way we approach investment , risk , AI and security and offering financial services firms that seize the opportunities an early advantage .
“ Financial services firms should be considering how they prepare for the quantum computing technology that looks certain to transform the market . Failing to do so risks others developing the ability to move faster in the short term and to attract the resources that will be essential for long-term success .”
Suhail Bin Tarraf , Group Chief Operations Officer at First Abu Dhabi Bank , continues : “ Outside of risk management , quantum supercomputing will lead to a range of banking capabilities , such as analysing large areas of unstructured data to make financial predictions or simulate investment portfolios . It will lead to a greater understanding of financial markets and economic booms or busts as well as management of asset allocation .
“ Experts believe that the commercialised use of quantum computing is still about a decade away . Scalability , cost , maintenance , legacy technology , and regulatory scrutiny are a few of the challenges in store for banks . However , early movers are likely to have an advantage and the chance for gaining a competitive foothold will not be free for long .”
50 November 2023