Some firms are preparing to counter the potential threats that quantum computers bring. Postquantum Cryptography (PQC) has been in development for several years.10 PQCs are new quantum-resistant cybersecurity techniques that will have to be deployed to secure data and transactions in the future. One such emerging quantum-resistant technology uses a blockchain approach to encrypt data at the record level with a hardware-enhanced, postquantum cryptography-secure key for each data element. The innovation in this approach is twofold. First, data is secure inside the perimeter, rather than being another fence around unsecure data elements. Second, with the blockchain approach, the data and its administrative records are immutable, and tampering is traceable.11 PQC will likely emerge with capabilities to mitigate risk based on new, government-approved techniques, coupled with novel approaches.12

 

 

When the National Institute of Standards and Technology postquantum cryptographic standards are finalized and published for use in 2024, this could serve as the foundation for a regulatory push toward quantum-resistant cryptography in the financial services industry.13 With the upgrade from current cryptography to quantum-resistant cryptography, all current sensitive information may have to be reencrypted and cryptography algorithms upgraded to be quantum-resistant. The new setup will likely require significant investment in hardware, software, communications, and infrastructure. Investment in system upgrades and regulatory compliance will likely drive the quantum-resistant cryptography market for the financial services industry over the next 10 years.

 

“If you accept that there is a finite probability that a quantum computer capable of breaking asymmetric cryptography will exist, say within the next ten years, how long will it take you to upgrade your cryptographic infrastructure, and what is the expected lifetime of your data? If you do not yet know the answers to these questions, the time to act is now! Once you know these answers, you can start to prioritize your efforts and be better prepared once standards are finalized.”

—Colin Soutar, Managing Director, Deloitte & Touche LLP

Playing to win: How quantum computing can help organizations improve customer engagement and generate additional revenue

Financial services firms are also using quantum computing to get ahead. These offensive use cases include Monte Carlo simulations, portfolio optimization, risk minimization, and complex derivative calculations.14 Quantum computers may also be used to improve the ability of AI to derive useful information from large volumes of data.15 Firms can also leverage the power of quantum computers to elevate the customer experience by processing customer inputs and behavior to predict their needs in near real-time.16

FSIs’ spending on quantum computing offensive use cases is lagging defensive spending because full-scale quantum computers are not commercially available as of mid-2023.17 Even so, spending on quantum technologies such as quantum annealers, for specific use cases, has started at firms that have made the strategic choice to be leaders in quantum computing. These firms are expected to switch to more powerful quantum computing hardware when it becomes commercially available.

Exploiting the advantages of quantum computing requires different expertise than what is learned through programming and architecting traditional IT systems.18 For this reason, a few FSIs, among them Goldman Sachs, JPMorgan Chase, HSBC, and Barclays, have formed teams to figure out the problems they want to address with quantum computers and programming solutions to be effective in a quantum computing platform.19 Quantum computing capabilities can help organizations to create an information advantage over competing FSIs that can be sustained for at least the initial phase of quantum computing adoption, which may last several years.

If quantum computing reaches mass adoption in the early 2030s as expected, the information advantage will likely shift to information parity. However, the quantum capability will be no less valuable. It will likely become a necessity for at least a few areas of operation, where speed and comprehensiveness contribute to the value of business process optimization.

Firms that plan to be early movers on the offensive side will likely have to start exploring and experimenting with the potential use cases of quantum computing. On the defensive side, firms can start by inventorying their data and systems for the upcoming transition to postquantum cryptographic standards. With the combination of urgency and opportunity, quantum spending in FSIs has already begun and spending will likely accelerate for at least the next 10 years. At some point in the future, we may even see a time when quantum computing is the norm, and it is just called “computing.”