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October 31, 2023updated 01 Nov 2023 8:43am

Government urged to create quantum task force for UK financial services sector

Banks and other financial businesses need guidance on the benefits and pitfalls of the emerging technology, two new reports say.

By Matthew Gooding

A quantum computing task force should be created for the UK financial services sector to help businesses harness the potential of quantum technology, an industry group says. The task force could also help organisations guard against the risks posed by quantum algorithms, according to two new reports published by UK Finance.

Quantum computing could transform financial services. (Photo by leungchopan/Shutterstock)

The papers contain a series of opportunities and threats posed by quantum technology, a new type of computer currently in development. Once reliable quantum machines are in circulation, it is likely they will be able to far exceed the processing power of classical machines for performing specific tasks. Many experts believe this point – dubbed quantum advantage – will occur at some point in the next decade.

Financial services is often cited as an area where the first quantum computers could be deployed, which is why UK Finance, a body representing 300 banking and finance companies, has been studying the technology.

Jana Mackintosh, managing director of payments, innovation and resilience at UK Finance, said quantum computing “is going to transform the financial services industry, it’s just a matter of when”.

Mackintosh said: “It represents a multibillion-pound opportunity, from new levels and speeds of risk analysis to radically streamlining compliance processes that currently cost the sector billions every year. We cannot ignore the risks, however, and the reality that when a cryptographically relevant quantum computer is developed, it could break the encryption underpinning all payments and electronic commerce.”

The opportunities and risks of quantum computing for financial services

The reports, produced for UK Finance by IBM consulting, outline eight areas where the authors believe quantum computing can benefit financial services companies. These are: enhancing risk analysis capabilities, streamlining compliance processes, improving portfolio optimisation and asset management, securing sensitive data, revolutionising data management, optimising operational processes, enhancing sales strategies and improving pricing models.

However, they don’t want that unless companies in the sector are “systematically safeguarded against this risk, [as] a cryptographically relevant quantum computer would be able to unravel the security on all payments systems and access secure personally identifiable information. This refers to the ability of quantum computers to crack current encryption standards used to secure transactions. Post-quantum cryptography, which will be resistant to such attacks, is currently in development by teams around the world.

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Other risks highlighted are possible market instability caused by unequal access to the technology, insufficient quantum talent in the UK, a technological debt from legacy systems, as well as a number of environmental considerations associated with quantum technology.

Is a quantum task force needed in financial services?

The report makes seven recommendations, including the setting up of a quantum computing task force “responsible for monitoring advancements in quantum computing, identifying potential use cases relevant to the financial services sector”. This “should also, as a priority, work on developing a strategic roadmap for safely integrating quantum computing solutions,” the report says.

Alongside this, a separate quantum-safe task force should be established with a mandate to “develop and implement sector-wide quantum-safe transformation strategies”. It should “represent all parts of the financial services ecosystem as well as national critical infrastructure”, the authors write.

UK Finance’s Mackintosh added: “Industry and government must work together now to secure the financial services industry against these threats, and put the UK at the head of the pack to seize the opportunities.”

As reported by Tech Monitor, financial companies including HSBC and Goldman Sachs are already experimenting with quantum technologies. The UK government set out a £2.5bn quantum strategy, aimed at boosting UK expertise in the technology, earlier this year.

Click here to subscribe to Quantum Untangled, Tech Monitor’s weekly newsletter on practical quantum computing for businesses.

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