BBVA and the Spanish National Research Council (CSIC) have signed a collaboration agreement to jointly explore the applications of quantum technologies in the financial sector.
As part of the agreement, the two entities have set up a mixed team of researchers that will work together on the design and testing of quantum algorithms applied to financial use cases. Researchers will work to determine if the use of this type of algorithm offers any advantages compared to traditional computing to solve a series of problems that have been identified in the financial sector that could be tackled with this technology.
"Even though these technologies are still in an exploration phase, at BBVA we are already trying to understand how they can contribute to improving the way we help our clients make better decisions using data,” explains Escolástico Sánchez, head Research and Development at BBVA New Digital Businesses. "The applications of this technology can have a positive impact on both the financial sector and customers and society at large," he adds.
"At CSIC we are interested in understanding the potential of quantum algorithms, - developed as part of our basic research - in solving practical problems. The financial sector is actually one of the most promising fields of application for these methods. Researching the potential applications of quantum computing in this sector is a fascinating challenge that can yield great scientific and economic impact," explains Diego Porras, a scientist at Institute of Fundamental Physics.
Quantum computers work with qubits, instead of the conventional bits of traditional computing. Unlike bits, whose value is restricted to a binary range of "0" or "1", qubits can exist in intermediate states of "quantum superposition.” Due to this characteristic, quantum computers are able to explore more easily a given computational problem’s set of potential solutions. This is especially useful in finance, in areas such as portfolio optimization, where multiple dimensions need to be taken into account to make the best decision. "While a traditional computer can take days to solve these types of problem, quantum computers can produce results in a matter of hours," explains Sánchez.
" The technology could improve the services offered to customers based on their profitability and risk profile in a faster and more efficient way "
In this case, the technology could improve the services offered to customers based on their profitability and risk profile in a faster and more efficient way. In addition, using this type of algorithms could also allow introducing new variables such as sustainability to create more complex products that also have a positive forward-looking impact. "In this way, technology could help clients make better investment decisions to ensure they promote sustainable goals," says Sánchez.
Although for the time being there are no commercial quantum computers capable of performing this type of calculations, there are already some prototypes on the market, such as those manufactured by IBM or Google, which offer this type of services in the cloud. These prototypes can be used to implement and demonstrate the potential of the algorithms developed jointly by BBVA and CSIC to solve this type of use cases.
One of the most innovative aspects of the agreement is that it will also explore the development of 'quantum inspired' methods: new algorithms in traditional computing that take ideas from quantum computing to solve complex problems, at least until quantum computers are available in the market to perform these tasks.
Sharing knowledge and experience
Understanding how and in which cases quantum computing can bring advantages in the financial field requires a combination of practical understanding of financial problems and experience in the design of quantum algorithms. "For this reason, the BBVA-CSIC partnership will provide the best possible framework to take on this challenge", explains Juan José García-Ripoll, coordinator of CSIC’s Thematic Quantum Technology Platform.
On the one hand, BBVA brings the experience of years of innovation in the financial sector, as well as the body of knowledge amassed through the research activity of its New Digital Business area, which works to understand the implications of this technology in the future of the sector. CSIC, on the other hand, brings the expertise of its researchers at the Institute of Fundamental Physics, which has been researching the design of and studying quantum devices for decades. The initiative is also part of the CSIC’s increasing focus on this field, which has resulted in the recent creation of the Thematic Quantum Technology Platform, which aims to foster collaboration with the private sector and includes an agreement with IBM to lead a IBM Q Hub quantum computing innovation platform in Spain, intended for research centers and companies.
BBVA and CSIC’s agreement is a first step on a path of collaboration that aims to increase the safety and efficiency of financial products. In addition, this agreement contributes to expand the range of applications of quantum physics in different economic sectors, all with a great potential for disruption.