How JPMorgan Chase and Other Banks Plan to Use Quantum Computing

Although quantum computing technology is still new, JPMorgan Chase, Ally Bank, Credit Agricole and other banks are actively testing it and using it in some cases, according to speakers at the HPC+AI conference on Wall Street in New York this week.

Marco Pistoia, Managing Director and Distinguished Engineer, said that if a company doesn’t do anything about the market right now, and just waits for the quantum advantage to become a reality, and when the quantum advantage becomes a reality, it may be too late.”, Head of Global Technology Applied Research and Head of Quantum Computing at JPMorgan Chase “We want to be ready when a quantum advantage becomes possible at a higher level.”

These banks don’t try to buy and use quantum computers directly. They are using cloud-based quantum computing as a service offerings from companies like D-Wave, IBM, Google, Amazon, Rigetti, Microsoft and QC Ware. They test advanced computer power for complex issues like portfolio optimization and index tracking.

Banks strive to improve speed, as well as increase accuracy in simulations and calculations for risk analysis, fraud detection, and pricing of complex derivatives.

“The financial services sector is responsible for computing large models that include a huge amount of data fairly quickly,” said Heather West, director of research, Infrastructure Systems, Platforms and Technologies at IDC. “However, using the classic computer infrastructure, these models are limited in the number of variables that can be included and the time it takes to run these models.”

Using quantitative computing, she said, “financial institutions will be able to produce better and more accurate forecasts and assessments of risk in near real time.”

In a survey of West financial institution leaders conducted in 2021, 25% said they are currently investing in quantum computing technology, and 43% said they plan to invest in 2022. Use cases that include cash allocation from ATMs, credit history, and derivatives rates, and fraud detection, compliance, and transaction settlement.

“While quantum computing technology is new, it is well suited to experimenting with optimization problems, making this a good time for financial institutions to start experimenting and identify appropriate use cases for working on quantum computing systems,” West said. She said banks should also develop the quantitative algorithms and applications needed to power such problems once quantum systems are scaled to a point where quantum advantage can be achieved.

Quantum computing makes direct use of quantum mechanics, the laws of physics that govern the smallest particles in the universe, to solve problems at high speeds. Traditional computers only allow a piece of information to live in one state (0 or 1) at a time. A quantum computer uses qubits (quantum bits) that enable bits of information to be 1, 0, or both 0 and 1 simultaneously. The result is a computational system that can handle and evaluate many sets of information simultaneously.

A quantum computer can cycle through 10 to 154 power voltage answers to a problem in a microsecond.

But technology still faces challenges to overcome. McKinsey analysts recently noted White papers Manufacturers are still trying to measure the number of qubits in a quantum computer while achieving a sufficient level of qubit quality.

“The most important milestone will be the realization of fully error-corrected and error-tolerant quantum computing, without which a quantum computer cannot provide accurate and computationally accurate results,” the authors said. “Five manufacturers have announced plans to have fault-tolerant quantum computing devices by 2030. If this timeline continues, the industry will likely create a clear quantum advantage for many use cases by then.”

In the same white paper, McKinsey analysts said the most promising use case for quantum computing in finance is in portfolio and risk management. “For example, quantitatively optimized loan portfolios that focus on collateral could allow lenders to improve their offerings, possibly lower interest rates and free up capital,” the authors stated.

“In finance, you have a lot of use cases with exponential complexity,” Pistoia said. “As the level of complexity explodes and the data set becomes large enough, classical computing can no longer solve this problem.”

Another reason the financial industry needs quantum computing, he said, is speed.

“In finance, we need answers right away, because the market is changing very quickly,” Pistoia said. “The market is volatile and the three-day calculation is absolutely useless. So we need answers right away and we need accurate answers.”

The Quantum Computing Research and Engineering team at JPMorgan Chase is exploring the use of quantum computing for risk analysis, option pricing, portfolio optimization, fraud detection, and merger analysis.

The bank is still in the research stage.

“I think quantum computing is very important,” Pistoia said. “It is not yet fully at the point where it can be used in production. Quantum computers are not powerful enough. When we are in the scientific phase with a certain technology, this is the best moment to actually collaborate with other companies, publish results and form partnerships so that we can learn from other groups and other groups can learn from us.”

The vendors at the conference, even from traditional computer and chip companies like Dell and Intel, also seemed to feel that a shift in high-performance computing technology to quantum computing was inevitable and that they felt compelled to invest in quantum technology.

“You don’t have a choice,” said Jay Boisseau, HPC technology and artificial intelligence strategist at Dell Technologies. “It’s coming whether you like it or not.”

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