Quantum computers pose a threat to current encryption methods, posing challenges to the financial sector. But for Swiss banks and insurance companies, these technologies do not only present risks, but also opportunities, notes the Swiss Bankers Association in a report.
Quantum computers will likely soon move from the laboratory to industrial production – when and how this will happen remains to be seen. Estimates range from the end of the 2020s to the 2030s. But the potential repercussions on the financial sector are already taking shape, indicates a report by the Swiss Bankers Association (SBA) and the company Quantum Basel.
The report aims to highlight the risks and opportunities of quantum computers for the financial sector. It appears that the potential is particularly significant in four areas of application:
- In risk management and monitoring, quantum computers can analyze complex interdependencies between assets and derivatives and perform near real-time tracking. In wealth management, quantum computers can optimize portfolios through parallel calculations and better simulations, resulting in higher yields.
- In the area of algorithmic trading, quantum computers enable more efficient and accurate algorithms for trading in financial markets.
- Quantum computers make it quicker and cheaper to build and train artificial intelligence models that can then provide more accurate and efficient predictive models when used in the business world.
Thanks to their ability to perform complex calculations and simulations more efficiently and precisely, quantum computers therefore offer banks and insurers new application possibilities and a head start in calculations and analysis. , according to the authors of the report.
Harvest now, decipher later
However, there is also a risk that quantum computers will break current encryption methods used in banks’ IT systems. Due to the risks associated with so-called “Harvest now, decrypt later” attacks and the long delay in introducing quantum encryption, quantum computing already represents a challenge to be taken seriously, note the authors of the report. They draw the following recommendations for action for banks, regulatory authorities and the political sphere:
- Banks should continually adapt existing security guidelines and develop a roadmap for the introduction of quantum encryption. Furthermore, they should develop their quantum computing capabilities in collaboration with specialized organizations and research institutes. This includes supporting application research with Swiss universities and research institutes in order to strengthen mutual know-how and ensure a sufficiently large talent pool in the future.
- Regulatory and supervisory authorities of the financial sector should maintain regular dialogue with the sector in order to understand the application areas of quantum computing in the financial sector and to identify potential needs for action in time. From a regulatory point of view, the ASB recommends restraint. The potential risks associated with the use of quantum computing are sufficiently covered by current regulations, which are technology-neutral and principled, the report says.
- The use of new technologies such as quantum computing, AI and Distributed Ledger Technology (DLT) is decisive for ensuring the competitiveness, innovation capacity and resilience of the Swiss financial center in the future. long term. Therefore, financial industry decision-makers, authorities and policy makers should set the course today to exploit the opportunities offered by quantum computing in the financial industry in the coming decades and to identify and reduce the associated risks in time.
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