As financial institutions continue to invest in quantum computing, the French bank announced two successful experiments for derivatives and credit calculations.
Global banking group Crédit Agricole has successfully run proof-of-concept quantum computing experiments to be applied in finance and banking. The bank partnered with French company Pasqal, a quantum computer manufacturer, and the Spanish firm Multiverse Computing, which specializes in quantum and quantum-inspired algorithms.
Quantum computing is the evolution of supercomputers. Developers believe that the rapidly-emerging technology, which uses laws of quantum mechanics instead of digital systems to solve complex problems, can be used to face global challenges that require massive computational processing power.
In finance and banking, quantum computing is expected to provide faster, safer and more accurate stock calculations, credit analysis, transactions and other fintech operations. Companies like IBM with IBM Quantum or Microsoft with Azure Quantum have been operating cloud quantum computing resources for several years, with thousands of users leveraging the technology, though quantum computing is still in experimental stages.
On Jan. 26, 2023, Crédit Agricole, Pasqal and Multiverse Computing announced positive and conclusive results on two experiments that used quantum computing in real-world situations.
The two experiments, which began in mid-2021, aimed to evaluate the contribution of an algorithmic approach inspired by quantum computing and quantum computers’ potential in two areas: The valuation of financial products and the assessment of credit risks.
“These two proofs of concept demonstrated the potential and reality of quantum computing for finance, despite these technologies still being in their infancy,” said Ali El Hamidi, the project’s sponsor at Crédit Agricole. “We took advantage of this initiative to start developing the internal skills to prepare for a technological breakthrough. If it happens, it will have a direct and decisive impact on competitiveness in our sector.”
The valuation of financial products is becoming one of the most challenging areas for organizations. An increase in regulations, pressure for transparency and adjustment models for derivatives have made calculations highly complex. For years, fintech has been eyeing quantum computing for its ability to solve these operations efficiently.
The French bank explained that the goal of their quantum computing experiment was to assess the performance of quantum computing in the valuation of derivatives — a complex type of financial security used by traders to access specific markets and trade different assets.
The global banking group reckons that the use of quantum neural networks has been proven by research to be beneficial for these types of calculations. However, in reality, the technology is too resource-intensive and suffers from lengthy processing times.
Based on the results of their quantum computing experiments, Crédit Agricole noted that the technology can be used to optimize speed and memory if specific algorithmic techniques are applied.
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