IBM and HSBC—two acronyms whose meaning has been lost to the sands of time—have been working together to build a powerful quantum computing financial algorithm.
Now, the results are in: HSBC touted a 34% improvement in predicting how a bond will trade at a given price in the European bond market—a major breakthrough thanks to IBM’s advanced Heron processor.
The big deal: Quantum computing combines tremendously powerful algorithms with quantum physics mechanics to solve problems faster than regular old computers. While that sounds cool, up until now, quantum computing's real-world applications have been limited.
But using IBM’s tech, HSBC was able to more accurately estimate whether or not a customer’s trade request on the bond market would be filled than by using classical methods like its competitors. While this was just a backtest of bond market data and not a real-world application, the implication is that IBM’s quantum computing tech could give HSBC a serious edge over everyone else.
Finance gets a reboot
“Is this a ‘Sputnik moment’ for quantum? My instinct is yes,” Head of Quantum Technologies at HSBC Philip Intallura told Bloomberg.
In the world of finance, where fractions of a second can make or break fortunes, if quantum computing provides even the smallest of advantages then it’s something every bank on Wall Street will be desperate to get for itself. That’s why a slew of firms, including JPMorgan, Goldman Sachs, and Citigroup, have all been working on their own quantum algorithms
Quantum computing’s potential goes beyond finance, too. Analysts believe the tech could transform entire industries, and Bloomberg reports that revenue from quantum computing could skyrocket from $4 billion last year to as high as $72 billion within a decade.
To be fair to our regular old MacBook Pros, HSBC’s experiment combined classic computing and quantum computing, and it’s still going to take years before quantum becomes the new normal—so maybe don’t toss your computer out the window just yet.—LB
Making sense of market moves
Stay up to date on the latest market news with daily analysis of the investing landscape, served up Brew-style.