Quantum technologies have huge potential to help the fintech and financial sectors, however, ensuring firms are safeguarded against cybersecurity risks is of paramount importance as, without it, security on all payments systems and private data could be unravelled reveals UK Finance, the UK banking and financial services trade association.
In its latest reports, Quantum Risks and Quantum Opportunities UK Finance sets out seven recommendations on how the UK sector can best prepare for the new wave of technology. It sets out that a quantum taskforce must be created to capitalise on the multibillion-pound opportunities it presents.
The Quantum Opportunities report highlights eight key areas that can benefit from quantum technologies:
- enhancing risk analysis capabilities
- streamlining compliance processes
- improving portfolio optimisation and asset management
- securing sensitive data
- revolutionising data management
- optimising operational processes
- enhancing sales strategies
- improving pricing models
Following this, it spotlights various functions which could use quantum tech too, and how it can be achieved. Quantum computing can enhance fraud detection capabilities, the report reveals, as it can rapidly analyse datasets. Furthermore, it can identify patterns that may indicate fraudulent activity. It enables firms to maintain market integrity, while protecting themselves and consumers more effectively.
UK Finance also brings to light the importance of collaboration in driving innovation and fostering widespread adoption of the tech. It then shares which firms are already working on quantum computing opportunities. Examples include J.P. Morgan, Goldman Sachs, Wells Fargo and HSBC.
Not without risk
While quantum computing can accelerate efficiency in the financial world regarding compliance and security, a lack of preparation for the tech could be detrimental. Security measures currently used by the financial services industry are not up to par. In fact, a cryptographically relevant quantum computer (CRQC) would be able to unravel the security on all payments systems and access secure personally identifiable information.
Potential risks include:
- cryptographic risk
- market stability
- a deficit of quantum literate skills
- Technological debt within organisations
- ethical and environmental considerations
Jana Mackintosh, managing director of payments, innovation and resilience at UK Finance, comments: “Quantum computing is going to transform the financial services industry, it’s just a matter of when. It represents a multibillion-pound opportunity, from new levels and speeds of risk analysis to radically streamlining compliance processes that currently cost the sector billions every year.
“We cannot ignore the risks, however, and the reality that when a cryptographically relevant quantum computer is developed, it could break the encryption underpinning all payments and electronic commerce.
“We must be ready. Industry and government must work together now to secure the financial services industry against these threats, and put the UK at the head of the pack to seize the opportunities. In these reports, we set out five recommendations to do just that and ensure the UK is not just quantum safe, but ready to lead in this transformational technology.”
Preparing for the future
The government has set out a £2.5billion quantum strategy to address the risks highlighted by UK Finance, as well as capitalise on the potential opportunities. Nonetheless, to ensure the UK can match its ambitions, UK Finance has also set out recommendations across both its reports:
Recommendation 1: Establish a cross-sectoral Quantum Safe taskforce
UK Government should create a financial sector task force mandated to develop and implement sector-wide Quantum Safe transformation strategies. It should represent all parts of the financial services ecosystem as well as national critical infrastructure.
Recommendation 2: Understand the global picture
The UK should be constantly vigilant of other nations’ work to develop quantum technology. Government should also go further to encourage the development of quantum technology in the UK at the same time as encouraging all private enterprise (particularly in critical national infrastructure) to become Quantum Safe.
Recommendation 3: Grow the quantum workforce
Government should work with quantum experts to develop a strategy for a quantum literate workforce, and support this with targeted investment in long-term workforce growth.
Recommendation 4: UK supervisory authorities must start their Quantum Safe journeys
UK financial authorities are pillars of the financial ecosystem that hold vast troves of sensitive market and firm data, and therefore must start understanding the implications of quantum for their systems and controls.
Recommendation 5: Develop targeted sectoral roadmaps
The government, with support from the National Crime and Security Centre (NCSC), should work with the private sector to develop sector-specific Quantum Safe roadmaps. This should begin with the 13 areas of critical national infrastructure (including finance).
Recommendation 6: Establish a quantum computing task force
It will be responsible for monitoring advancements in quantum computing, identifying potential use cases relevant to the financial services sector (and relevant subsectors). This should also as a priority work on developing a strategic roadmap for safely integrating quantum computing solutions.
Recommendation 7: Encourage firms to invest in quantum computing education
They must also invest in training for their existing workforce as well as their future workforce. This should include providing access to resources, workshops and courses on quantum computing fundamentals.