Finance is not the only industry looking for a way to profit from even the small, unstable quantum computers that mark the current state of the art; sectors from aerospace to pharmaceuticals are also hunting for a "quantum advantage". But there are reasons to think finance may be among the first to find it. Mike Biercuk of Q-CTRL, a startup that makes control software for quantum computers, points out that a new financial algorithm can be deployed faster than a new industrial process. The size of financial markets means that even a small advance would be worth a lot of money.
Banks are also buying in expertise. Firms including BBVA, Citigroup, JPMorgan and Standard Chartered have set up research teams and signed deals with computing firms. The Boston Consulting Group reckons that, as of June, banks and insurers in America and Europe had hired more than 115 experts—a big number for what remains, even in academia, a small specialism. "We have more physics and maths PhDs than some big universities," jokes Alexei Kondratyev, head of data analytics at Standard Chartered.
Startups are exploring possibilities too. Enrique Lizaso of Multiverse Computing reckons his firm's quantum-enhanced algorithms can spot fraud more effectively, and around a hundred times faster, than existing ones. The firm has also experimented with portfolio optimisation, in which analysts seek well-performing investment strategies. Multiverse re-ran decisions made by real traders at a bank. The job was to choose, over the course of a year, the most profitable mix from a group of 50 assets, subject to restrictions, such as how often trades could be made.
The result was a problem with around 101,300 possible solutions, a number that far outstrips the number of atoms in the visible universe. In reality, the bank's traders, assisted by models running on classical computers, managed an annual return of 19%. Depending on the amount of volatility investors were prepared to put up with, Multiverse's algorithm generated returns of 20-80%—though it stops short of claiming a definitive quantum advantage.
Not all potential uses are so glamorous. Monte Carlo simulations are often used in regulatory stress tests. Christopher Savoie of Zapata, a quantum-computing firm based in Boston, recalls one bank executive telling him: "Don't bring me trading algorithms, bring me a solution to CCAR (an American stress-test regulation). That stuff eats up half my computing budget."