Direct Tax Services
Select Your Location
The progress of technology has caused banks to adopt technologies that have played a pivotal role in transforming the way the banks work.
Financial institutions are on an overdrive to gain the tiniest of advantages by implementing the best tech options. We are discussing one of those tech options employed by banks, i.e., Quantum Computing.
Table of Contents
Quantum Computing is the use of quantum mechanical phenomena to perform computation. Computers that perform quantum computations are called Quantum Computers. Quantum computers are a new kind of technology that can solve complex issues that is well beyond the capabilities of the traditional system.
In technical terms, QC harnesses the law of quantum mechanics to do complex data operations. In case of traditional computers, it uses bits, whereas QC harnesses quantum bits known as Qubits.
It was highly expected that QC power might fundamentally change the face of banking forever. Its ability to reduce the amount of time required to solve complex calculations while improving accuracy is what makes it significant in the banking sector. Although its full implementation is yet to be achieved, many banks have already experimented on how they can change to this new environment.
You would know that the encryption of personal data is vital for banking. For a traditional computer to find the key to decrypt, the algorithm would require 1034 steps. Now, to put that into context, a processor that can do trillion operations per second would still take billions of years to resolve the issue. However, quantum computers could solve the decryption in a matter of 107 steps.
One of the top most priorities of banks is to protect crucial information and communication. Whether it is an individual, business, or government, they share massive amounts of data as part of their banking needs. Therefore the financial institutions face cyber attacks more than any other.
With the growing capabilities of QC, it provides a set of robust new defenses that protects vital data against any prospective attacks. It can also prevent spying by authorized groups and also provide for the present and future secrecy of encryption keys and still protect networks from the traditional threats that threaten to steal information. With this approach, no known algorithms can break the encoding methods used for data protection, thereby giving banks perfect protection.
Banks can gain an advantage in the banking sector by employing the use of QC. Until a fault-tolerant universal system is available, banks must embrace the change and employ its use to best of their advantage.
Some of the areas where banks can be benefitted from the use of QC are:
Banks can use this technology to speed up portfolio optimization. The technology helps in grouping disparate data sets relating to different assets for investment by determining how it can be interconnected and dependent. It helps in lowering the portfolio risks as compared to traditional methods.
QC technology can assist banks in the detection of fraud. The threat of security breaches and frauds related to banking services like online payments and transfers can be overcome with the use of this technology. Automated fraud detection uses pattern recognition to detect fraud, and QC supports effective pattern recognition algorithms that can operate with complicated statistical issues. It will allow banks to identify fraud automatically through self-learning networks, which also allow banks to detect any criminal activity.
Banks are often overloaded with high transaction volumes. The Quantum technology allows billions of transactions per second. Moreover, infrastructure downtime would be close to nil with quantum technology, boosting efficiency. Large transaction batches would be cleared without the risk of system crashing.
With the advancement of technology, hackers have also stepped up their modus operandi. They can take control of remote devices and access sensitive data. Financial data encrypted with quantum cryptography is considered safer than any other type of digital security. It would not be possible for hackers to read encrypted data in a quantum form.
Financial institutions require executing trades quickly. It can be possible with quantum computing applications in sophisticated quantitative buy-sell strategies. This will allow financial institutions to generate higher returns with minimal risk.
The quantum technology is expected to improve customer relationship management in banking. It will increase accuracy in terms of targeting the right customer based on purchasing trends etc.
Most banks believe QC technology as a way to reduce their risk exposure while making investments and maximizing potential gains. Many institutions are looking to optimize current processes to reduce issues with latency through QC. Large batch transactions that feature various collateral, liquidity, and credit constraints can take a considerable amount of time to settle because of a variety of data points for analysis.
The QC technology can analyze the information in no time and provide appropriate outcomes. Banks also provide delivery vs. Payments transactions to clearing houses where trades don’t have the capacity for instant settlement, and that issue can also be resolved.
A quantum computer does more than moving data faster to various places or creates new efficiencies to banks. It can also accelerate the development of financially related AI rapidly.
Today banks use Artificial Intelligence and machine learning to offer automated services that can solve queries. In the case where a customer connects on the bank’s website through a chatbot, then the query may be answered by an AI system. It can even help you with applying for a loan or completing a trade. It helps the banks’ employees to focus on other complicated tasks that require a lot of time.
The banking industry uses AI to improve workflows, and this is due to the limitations with the traditional processes. Although the present devices are powerful, but QC can go to a different level. The combination of quantum computer with artificial intelligence can create interfaces that can anticipate requirements based on past data and future requirements.
Today, the banking industry uses a combination of classical computing and mathematical algorithms to make predictions for portfolios. The future of QC creates a vast range of new options to explore, thereby creating new financial efficiencies that can reduce consumer mistakes in various accounts.
This technology can potentially offer banks a simulated employee who will interact with the consumers in a way human would. Such a future world would require us to adapt to the changes in the way the banking industry functions.
Read our article:Can Artificial Intelligence in Banking reduce Cyberthreats?
Ashish M. Shaji has done his graduation in law (BA. LLB) from CCS University. He has keen interests in doing extensive research and writing on legal subjects especially on corporate law. He is a creative thinker and has a great interest in exploring legal subjects.
Many investors use fixed deposits as their primary investment vehicle. Investors with a high-ri...
The main idea of CDS, which was initially to give banks a way to transfer credit exposure, has...
Black money has been the subject of heated political debate in India for a long time. Successiv...
The Apex Court pronounced a judgement in the case titled Tata Motors Vs The Brihan Mumbai Elect...
Since economies are moving towards digitalisation and making it feasible to conduct transaction...
The Alternative Investment Funds (AIFs) Pro-rata and Pari-Passu Rights Proposal Consultation Pa...
The Financial Action Task Force, i.e. FATF (the Force), is the global money laundering and terr...
Advance tax refers to the payment of the tax liability before the end of the relevant financia...
On 11.12.15, the Hon’ble Delhi High Court (HC) pronounced a landmark judgement in the case ti...
Money laundering can be defined as the process of illegal concealment of the origin of money ob...
Are you human?: 8 + 9 =
Easy Payment Options Available No Spam. No Sharing. 100% Confidentiality
Digitalization has created a massive disruption around industries. Now customers expect more exceptional services a...
08 Aug, 2020
With the advancement of disruptive technologies, the business of banking is changing. The customer behaviour and ex...
06 Jul, 2021
Red Herring Top 100 Asia enlists outstanding entrepreneurs and promising companies. It selects the award winners from approximately 2000 privately financed companies each year in the Asia. Since 1996, Red Herring has kept tabs on these up-and-comers. Red Herring editors were among the first to recognize that companies such as Google, Facebook, Kakao, Alibaba, Twitter, Rakuten, Salesforce.com, Xiaomi and YouTube would change the way we live and work.
Researchers have found out that organization using new technologies in their accounting and tax have better productivity as compared to those using the traditional methods. Complying with the recent technological trends in the accounting industry, Enterslice was formed to focus on the emerging start up companies and bring innovation in their traditional Chartered Accountants & Legal profession services, disrupt traditional Chartered Accountants practice mechanism & Lawyers.
Stay updated with all the latest legal updates. Just enter your email address and subscribe for free!
Chat on Whatsapp
Hey I'm Suman. Let's Talk!