(FinancialTimes) Wall Street’s biggest banks have stepped up their research into quantum computing, signalling growing confidence that recent breakthroughs in the field have laid the foundation. The potential for the technology to revolutionise activities like risk management and trading are so great that banks need to start learning how to harness it now, said William Hartnett, a managing director at Citi.
Goldman Sachs increased its five-year-old research effort last year after seeing hardware advances that suggested the technology was on the brink of a rapid acceleration. Banks such as JPMorgan Chase and Citigroup, which 18 months ago took its first small stake in a quantum computing company.
The banks’ research efforts centre on trying to design new types of algorithms capable of being run on quantum machines. The first of these involve a class of optimisation problems that take advantage of the probabilistic nature of quantum computing to analyse a large number of possible outcomes and pick the most desirable, rather than following the precise logic paths of traditional computers. The work has been focused on so-called Monte Carlo simulations, complex calculations that banks normally carry out daily to assess their overall risk positions which are the same techniques are used in options pricing.
The same technology could also make it possible to optimise the investment portfolios of wealthy clients on a case-by-case basis, he said. Further in the future, the banks also hope to use quantum computing to speed up the machine learning systems that lie at the heart of their push into artificial intelligence.