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Quantum Computing and Artificial Intelligence: two technologies with enormous potential

The financial industry has always been a forwardlooking sector, keen to embrace new technologies and innovation in order to improve customer service, reduce risks associated with human error, and improve overall profitability. We have already seen massive advances, from physical cash to an electronic banking system, from local branches to web-banking and from bearer bonds to high frequency trading. The ceaseless quest for technological innovation has seen a new sector, FinTech, emerge and we are today all familiar with the buzzwords of Blockchain, Bitcoin, Big Data and Sentiment Analysis. These are however current technologies and live projects with real world uses. 

Joe SalibaBeyond the cutting-edge of today’s technology, institutions are investing heavily into two major areas of innovation, both with enormous potential to severely disrupt both the financial sector, and the wider world. These technologies are Quantum Computing and Artificial Intelligence. You will be forgiven for thinking that this is the realm of science fiction, but both technologies, although in their infancy, are being tested and refined in labs around the world. 

Let’s start with quantum computing which makes use of a quantum mechanical phenomenon (superpositions) that allows them to solve certain sorts of computational and algorithm-based problems faster than classical binary computers. Quantum computers will render useless some methods of cryptography used in financial services. What is more, this encryption cracking capability could come anytime within the next five years, so it is essential to plan for postquantum security now by selecting encryption methods that are deemed "Quantum safe". 

As always, with technological threats come opportunities, and the enormous power of quantum computers can be harnessed to gain a massive first-starter advantage in areas such as high frequency trading and stock option pricing. However, building the algorithms that are optimised for Quantum Computing power will have a major impact on fraud detection and data analysis once the power of quantum computing arrives. 

The second topic is Artificial Intelligence (AI), which ranges from complex rules-based engines such as the chatbots or robo-advisors used on online banking platforms, all the way to true AI that can enable funds to absorb vast amounts of data, combine it with self-optimising algorithms and make increasingly accurate predictions about the financial markets. Indeed, there are several hedge funds today that are fully autonomous and make all stock trades using artificial intelligence. 

As chatbots improve, robo-advice becomes increasingly accurate and AI outperforms human managers, it will be essential to focus on how humans and machines can best coexist. Machines’ lack of human bias could help us find new correlations in the vast silos of data, but human intuition, common sense and imagination remain an important balance to AI’s weaknesses. 

Both Quantum Computing and AI, central topics at 2018’s FundForum International's Data Science panel, for which I am the moderator, will have an increasing impact on the financial industry. 

As always, CACEIS is monitoring the forefront of technological developments to ensure we can deliver the robust security, data insights, information accuracy and business efficiency that our clients require now and in the future. 

The human element is central to our business and will remain so, but the assistance capabilities that AI and Quantum Computing offer will give our staff, and therefore our clients, is a significant advantage in an increasingly competitive industry.