The author of this article argues that while it might be early for quantum computing to be a tool for the mass-market, the same was said decades ago about the idea of hand-held devices we now all take for granted. And quantum computing will shape the world that wealth management operates in, the writer says.
For those who follow technology developments and how they might affect wealth management, a term that comes up occasionally is “quantum computing.” According to one definition from IBM, this refers to a “rapidly-emerging technology that harnesses the laws of quantum mechanics to solve problems too complex for classical computers.”
So what does this mean for the sector? To try and make sense of it all, we carry this guest article from Raj Madan, chief technology officer at AdvisorEngine, a wealth management software firm based in Raleigh, North Carolina. The editors are pleased are to share these insights; the usual editorial disclaimers apply. Email firstname.lastname@example.org if you wish to respond.
The next innovation wave in technology will profoundly impact your professional practice and reverberate through your personal life.
No, I’m not talking about artificial intelligence – I’m referring to a new era of computing power that’s just a few years away, called quantum computing.
Quantum computers will be able to solve challenges in minutes that today’s supercomputers would need centuries to figure out – modeling a cure for cancer, unlocking new sources of energy or determining how to turn deserts into farmland.
In financial services, quantum computing’s impact will be felt across the industry, from how we bank to how we build and manage investment portfolios, price assets, assess risk or detect fraud.
If you think AI is science fiction, quantum computing will sound almost unbelievable. To grasp it, let me explain the transformation underway in how computers work.
Since their inception, computers run on binary code – think of the 1s and 0s you’ve seen on screens in films like The Matrix. Computers have become more powerful over time because we’ve managed to continually increase the number of transistors (tiny electrical amplifiers) we can fit on microchips, making these machines more efficient at processing electrical signals.
But we’ve nearly reached a physical limit to how much we can fit
on a single microchip. Binary code is showing its age when tasked
with modern complex problems, such as simulating the behavior of
Quantum computing smashes through such limitations by doing away with transistors or relying solely on binary language. Instead, they transmit electrical signals at the atomic level through particles. (Yes, you read that right). And they operate in a non-binary state, allowing for a much wider range of computational possibilities.
With these changes, it’s like going from driving on a highway in your car to orbiting the Earth in the Enterprise. Any task that involves mathematical equations goes into hyper drive. That’s not an outlandish comparison: In 2015, Google and NASA reported that their quantum computer had solved a problem 100 million times faster than a regular computer. Keep in mind that was an early quantum computer too.
Hyper-speed for daily business
Consider every process you rely on right now to run your daily business that involves any sort of computations and data: Monte Carlo simulations in portfolio management, risk profiling, trading, rebalancing, performance reporting and fee billing, to name a few. Now imagine completing all these tasks in the blink of an eye and have results in real time. Throw AI powered by quantum computing into the mix, and you begin to see how radically different our digital tools will become.
The impacts won’t be limited to the back office either. Markets being traded by quantum computers will behave differently. With exponential computing power and protections, cryptocurrencies will make more sense for everyday use by consumers. Even our overall longevity could see an uptick thanks to quantum machines solving traditional health challenges, requiring a rethink of how long clients need to prepare for retirement.
However, there are a couple of things to keep in mind.