Quantum Computing

The physical principles underlying quantum computing are not easy to grasp, and the technology itself is not yet in widespread use, but its potential impact on the financial sector is becoming increasingly apparent. It represents both an opportunity and a challenge. With their ability to carry out complex calculations and simulations more efficiently and with greater accuracy, quantum computers open up new possibilities. This expert report identifies and explains four use cases of quantum computing in the banking sector: 

• In risk management and risk monitoring, quantum computers allow for the analysis of complex interdependencies between assets and derivatives and the monitoring of these in real-time.
• In portfolio management, quantum computers can optimise portfolios by performing parallel calculations and better simulations, thus potentially improving returns.
• In algo trading, quantum computers can support more efficient and precise algorithms for trading on financial markets.
• Finally, quantum computers can speed up and reduce the cost of building and training AI models that deliver more accurate and efficient forecasting in day-to-day business.

Besides these opportunities, quantum computing also gives rise to new risks that must be addressed, particularly by transitioning to quantum-safe encryption methods. Given the danger posed by “harvest now, decrypt later” attacks and the long lead time for introducing quantum-safe cryptography, quantum computing is a challenge that must be taken seriously right now.

With this in mind, the authors recommend the following measures at various levels: 

• Banks should continually adapt their existing security policies and draw up a roadmap for introducing quantum-safe cryptography. They should also work with specialist organisations and research institutes to continuously build up their quantum computing capabilities and increase their agility in applying this technology more broadly. This includes, in particular, supporting applied research in partnership with Swiss universities and research institutes to improve know-how on both sides and ensure a sufficient pool of talent in the near future.
• Regulatory and supervisory authorities in the financial industry should foster regular dialogue with the industry in order to understand where it can use quantum computing and identify potential action areas at the earliest possible stage. No new regulation is needed for the time being. The current, technology-neutral, and principles-based regulation sufficiently covers the possible risks of using quantum computing.
• Using new technologies such as quantum computing, AI, and distributed ledger technology (DLT) is vital to the Swiss financial centre's long-term competitiveness, innovative power, and resilience. As ever, this requires close collaboration with research institutes, short communication pathways, and a high degree of adaptability on the part of financial institutions. This recipe for success must remain in place and be promoted going forward.

Financial industry decision-makers, authorities, and political circles must lay the foundations today for the financial industry to harness quantum computing opportunities in the decades ahead and identify and mitigate the associated risks as early as possible. Taking the long view will create an ideal framework for a competitive, innovative, and resilient Swiss financial centre now and in the future.