Quantum Computing Applications in Finance
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Quantum Computing Applications in Finance

Quantum Computing Applications in Finance
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Learn how quantum computing can be used in the financial industry.

Quantum computing can be used in the financial industry in various ways.

Quantum computing has long been a concept that has only lived in theory but with recent developments, it has slowly become a very effective tool for enterprises. Holding a lot of potential, quantum computing can offer many new ways to solve problems in the business world. According to Accenture, about $1 billion was invested in quantum computing initiatives in 2016 and will likely grow in years to come. Although, quantum computing is technically still in its early stages, the world sees a lot of potential in what it can provide for us, whether it may be the healthcare industry or supply chain.

Quantum computers are powerful machines that leverage complicated and phenomenal laws of nature to process information. In short, most computers encode information in bits, meaning that every bit has a value of either 0 or 1. These 0s and 1s act as on and off switches, thus are the reason why computers work. Quantum computers use qubits which operate on two key principles of quantum physics: superposition and entanglement. Superposition allows these machines to use qubits that represent both 1 and 0 at the same time while entanglement establishes the relationship between these qubits. By using the principles of quantum mechanics and this new approach, these machines have the ability to run new algorithms that can provide a more holistic view of the data and performance, meaning that there is so much potential of what they can discover and uncover for our society, especially in the financial industry.

Portfolio Risk Optimization

Optimization is one of the most important processes in the business world. However, there can be so many factors to consider when a decision maker needs to figure out how to optimize. One of the major issues of computing a portfolio is that modern computers don’t have the computing power to work with multiple rebalances. Quantum computing has the potential to help generate attractive portfolios with thousands of assets with interconnecting dependencies, meaning that it can be used to identify a better way to manage risk that we cannot yet do today.

Clustering

With quantum computing, investors would have the ability to group together sets of assets or investors into groups that are unimaginable today. With this technology, we can find new patterns in various areas such as asset performance, risk, and customer sentiment. This can vastly improve how the business world operates in the financial industry and how consumers invest their capital.

JPMorgan Chase Teaming Up with IBM

In recent news, JPMorgan Chase will be teaming up with Samsung, Daimler AG and JSR Corporation to gain access to IBM Q systems to perform experiments. They are looking to learn how quantum computing can be used for optimizing, trading, pricing, and risk management. According to the Journal, JPMorgan Chase believes that this technology “could provide exponentially more computing power for solving certain types of problems that require the use of complex algorithmic models to determine a likely outcome.” These experiments are expected to take some time before any results can surface, however, the companies are very excited about the potential of the outcome.


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Don Q. Dao
Don Q. Dao
Always striving to learn, Don Dao is driven by new adventures and challenges. His love for media and social interactions has led him to pursue a career in marketing. Over the years, he has developed a broad skill set in all aspects of marketing, specifically in event organization, social media marketing, and content marketing. He enjoys working with passionate people to bring visions to life and inspire the world.

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