(Lexology) The stage is set for quantum computing to bring about seismic changes in the world as we know it. This a summary of a lengthy forecast from Butterworths Journal of International Banking and Financial Law that asks and answers “What could quantum computing mean for the banking sector?”
One key potential area of impact will be around the modelling of financial markets. Increased insight into market dynamics and behaviour, driven by better models, could be leveraged not only by participants but also by regulators and government as they oversee the banking sector and the health of the economy.
Such modelling could be further drilled down to the level of customer dynamics and used by financial institutions and regulators to illuminate and predict customer behaviour, providing risk trend insights and the opportunity to target offerings with greater fairness and precision.
What is true for the broader financial markets is also true for institutional balance sheets. The ability of banks to model their internal processes and work-flows, and to far better and quicker identify areas of weakness under stress is invaluable.
Finally, much has already been written about the risk quantum computers pose to current encryption practices. This risk merits serious thought: compromised cybersecurity has ramifications under both data protection legislation and (future) regulatory rules surrounding operational resilience. This risk can also, however, be overstated, as quantum technology equally offers an opportunity to devise super-secure methods of encrypting data.