Quantum computing & finance: imagining the future with IBM


Quantum computing is taking great strides. Big players are talking about it, and even big nations are scrambling to achieve ambitious, concrete and challenging results. But how will the world of finance benefit when they are achieve this? We asked Federico Mattei, Innovation and Technical Leader, and IBM Quantum Ambassador.

What are your latest innovations in the field of quantum computing?

On November 16, IBM held the Quantum Summit 2021, the annual meeting where in which new developments in quantum software and hardware are presented. This year’s edition was full of important announcements.
The performance of quantum computers is measured on three important axes: scalability, quality and speed.
Scalability measures the number of quantum bits (qubits) per processor. Following the announcement of the 27-qubit Falcon processor in 2019 and the 65-qubit Hummingbird processor in 2020, IBM announced the 127-qubit Eagle processor at Quantum Summit 2021, the first to surpass the 100-qubit-per-processor threshold. IBM’s roadmap is to exceed 1,000 qubits per processor in 2023 with the Condor processor. Processor quality is measured in Quantum Volume, a quantity that takes into account various technical characteristics of the processor. Over the past four years, IBM has doubled the quantum volume of its processors every year.
As for the speed of quantum systems, IBM measures this in CLOPS (Circuit Layer Operations Per Second). Last year, within the Qiskit quantum development framework, IBM released the Qiskit Runtime module, which has improved the execution speed of certain algorithms by up to 120 times – and is available on all IBM Quantum systems.

Why and how are you working on frictionless development? With what objective?

We are working on introducing new functionalities that take advantage of today’s classical computing resources, with which we hope to achieve Quantum Advantage – the point where certain information processing tasks, for practical applications, can be performed more efficiently or cost effectively on a quantum computer, versus a classical one. Our goal is to make sure that our users can take advantage of large-scale quantum resources without having to worry about the complexities of hardware: we call this development ‘frictionless’ and we plan to achieve it with through a serverless execution model.
Looking ahead to 2025 and beyond, we think that our dream of frictionless quantum computing will become a reality, where hardware will no longer be an issue for users or developers. By then, we anticipate that developers at all levels of the quantum computing stack will rely on our advanced hardware with a cloud-based API that will work seamlessly with high-performance computing resources to push the limits of computing in general and include quantum computing as a natural component of their existing computing pipelines.

What applications of quantum computing in the world of finance are possible today?

Despite the very rapid strides that quantum computing has been making in recent years, we have not yet reached Quantum Advantage, i.e. the point at which quantum systems can significantly outperform traditional systems for practical applications and thus be used in real business contexts.
However, it is essential to take advantage of the time that separates us from this goal to identify the applications that will benefit most from quantum computers and to start writing the first applications for this type of systems. We have a number of case studies with partners around the world exploring quantum applications in chemistry for battery and OLED progress, finance portfolio and risk optimization, and even machine learning to uncover new information from CERN’s Large Hadron Collider data, among other examples

and in the future?

Specific use cases of quantum computing for financial services can be classified into three main categories: targeting and forecasting, trading optimisation and risk profiling. We are exploring potential use cases in each of these categories with leading financial institutions around the world that have joined the IBM Quantum Network (a network of companies, start-ups, academic istitutions and research centres that has now grown to over 170 participants worldwide).
The application of quantum technology to financial problems, particularly those dealing with uncertainty and optimisation, will prove extremely beneficial to first movers. Imagine being able to make calculations that reveal dynamic arbitrage possibilities that competitors are unable to see. In addition to this, the use of behavioural data to improve customer engagement and a faster reaction to market volatility are some of the benefits we expect quantum computing to offer.

How long do you think is it it will be before the Quantum Advantage era? What will happen at that time?

Exceeding 100 qubits is a very important step towards Quantum Advantage, and we can expect that exceeding 1,000 qubits per processor in 2023 will be a major turning point in our ability to explore applications with a Quantum Advantage. In the IBM Quantum roadmap, in addition to hardware improvements, there are many software components that will make the pursuit of Quantum Advantage faster. Those who have invested in training and have prepared their application fleets for the arrival of quantum computers will have a significant business advantage over those who have been left waiting.

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Artificial intelligence in the future of fintech

Artificial intelligence is becoming an increasingly important player and is transforming and strengthening many sectors of our ecosystem, including the financial and insurance ones. We asked Francesco Basciani, data scientist of IBM and expert in the subject, what could be the possible developments in fintech and which new job opportunities could arise. Basciani is also one of the mentors in our mentorship program offered for free to the startups of the community. If you want to know more click here. But first, read the interview!

AI is developing fast but there is still great unexpressed potential. What are the biggest challenges for “unlocking the potential of AI” in 2020?

The application of AI models within companies is bringing benefits in terms of process automation, improved customer service and the discovery of previously unknown insights. The main ingredient to make profitable and proficient use of AI, is certainly the most important data. The more data you will own and the more you will be able to make it consistent and easily usable, the more you will be able to develop a data-driven approach within the company.

A limit we find today, however, is the non-applicability of AI in strongly regulated contexts where, in many core processes, the objective cause-effect relationship of the phenomena is required. This is one of the themes of the future: to make AI explainable. If we overcome it, there will be a great development of Augmented Intelligence.

What problems does the AI solve in the financial world today?

The application of AI in the financial and insurance sector is also allowing to improve the quality of services to the customer and reduce time and costs through better management of risk and fraud. The fields of application are many, from capital trading to fraud detection. On the latter, many traditional players are opening up to the use of increasingly innovative techniques to anticipate and discover new fraudulent patterns. This is a great challenge for the future.

And, which ones could it resolve, or contribute towards resolving, in the future?

In general, the fields of applicability of IA are numerous. With the advent of the 5G, the explosion of the IoT and increasingly simple access to large computational resources, the problems that the AI can help to solve are many and varied. The most important issue will surely be understanding the role of AI in the process of improving services such as Robo Advice, anti-money laundering or fraud detention (increasingly advanced).

This evolution also has an impact on new job opportunities. How do the profiles that companies have to choose with the necessary skills have to change?

Surely soft skills are becoming increasingly important in the labor market because of the high speed with which technologies are changing. For this reason, a strong analytical ability will be increasingly required, together with a strong curiosity and a great ability to seize the opportunities that innovation offers.

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Fintech Nights #2, this time we’re talking about insurtech

An exclusive evening of training as well as fun, to explore the opportunities and challenges of insurtech. This is the second edition of the Fintech Nights. We look forward to seeing you on 17th September on the rooftop of our headquarters in via Sassetti 32. Places are numbered, you can buy your ticket at this link from now or after reading in the next lines how the evening will actually take place. Without too much spoiling, here is the program, from the welcoming at 6 pm to the cocktail party: a special moment of networking under the stars.

The Fintech District team will open the evening with an overview of the theme and by launching some wide-ranging insights. We will start by telling you what Insurtech is and how this sector relates to the more traditional insurance world. We will surprise you by revealing how the history of insurance, born thousands of years ago, can still teach us something today. Of course, we will also venture in making some predictions for the future, asking ourselves and asking you what role insurance will play and, even before that, whether it will still be necessary to insure. Insurance has evolved and is still changing, as the onset of self-driving cars shows.

Below is an overview of the Insurtech market around the world to help understand market differences in terms of regulation, culture and size. We will focus on the most promising realities at an international level and on those entering the Italian market.

We can also observe interesting trends within our community. We will tell you about them to show you which are the business models present in Italy and what the startups operating in this sector think about the present and future of this market. Obviously, in this special evening, a section dedicated to Applied Innovation cannot be missing, with examples of collaboration between corporates and startups in the Italian market that will bring new ideas.

Special guests of the evening will be AXA and IBM who will talk to us about Insurtech through their concrete cases of innovation with a high technological slant.

AXA will show us the potential of the blockchain applied to the insurance world by talking about Fizzy, the first travel insurance based on blockchain and smart contract.

IBM will talk about how the IoT can transform insurance companies into preventive service companies.
During the evening, some insurtech companies from the Fintech District will also take part, bringing their own experience and point of view to the event.

By taking part in our second “Fintech Nights” evening you will be able to listen to and get to know Coverholder , Claider, GaiaGo, Healthy Virtuoso and Squarelife in person.

  • Coverholder – Fully digitised insurance brokerage and underwriting from carrier to intermediary. Offered on Coverholder’s cloud platform as well as in White labels solutions and an API platform integrating carriers and distributors.
  • Claider – Any claim, without pain. Claider is the revolutionary solution for digital insurance claims. The assistance App Claider supports claimants and the web app ClaiderNET supports claim handlers.

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  • GaiaGo – GaiaGO is a Mobility gatherer platform focused on the distribution of insurance products, aiming to offer a boost to sharing mobility models embedded into the territory.
  • Healthy Virtuoso – Virtuoso is the first white box for health that helps health and life insurance companies to lower the risk and increase the margin while acquiring new customers, strengthen the loyalty of the existing ones and collect precious customer behavioural information for the development of the 4.0 data-driven insurance policies and services.

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  • Squarelife is an insurance company that invents, designs, develops, produces, distributes and sells digital insurance products and solutions, reaching its customers directly or through partnerships.

The other insurtechs present in our community are Riskapp, Poleecy, Lokky, MioAssicuratore, TechEngines. Visit the page dedicated to our startups to learn more.

Fintech Nights #1: an evening of AI with the FD

Knowledge, Experience and Networking are the three pillars on which the “Fintech Nights” are based. The first edition of this new format launched by the Fintech District on 7th May was dedicated to artificial intelligence, a theme which is intensely connected with the development of the fintech sector but not only.

Since this is an exclusive initiative, reserved for our partners and those who bought tickets for the entrance, we will not retell everything but will let you peek at a few moments of Fintech Nights #1 through the keyhole. The evening began with an overview of how this technology is impacting many sectors, including the health sector with consequences that up to today we can only guess, which excite and, at the same time, frighten us.

Alessandro Longoni talked about it and remembering the ups and downs actually recorded in the history of artificial intelligence from 1952 when IBM unveiled its first commercially available scientific computer until 2016 when Google DeepMind’s ALPHAGO defeated Lee Sedol on a game of GO. Compared to previous years, the situation today is different. AI can continue to flourish. Indeed, it can do better thanks to the cheap processing power that allows you to process more data, thanks to the growing role of technologists in the development of AI and also to the large investments big tech are doing on it.

Let us take a look at who in practice develops and uses artificial intelligence. In Europe today there are 2,830 companies declaring to be AI Startups. With Antonio la Mura we have gone through the ranking of the countries with the highest number of AI startups: after the USA we find China and Israel. The first European country is the UK and Italy is in 19th position (Source: Artificial Intelligence – A strategy for European startups | Roland Berger, 2018).

In Europe, however, there is no lack of initiatives to support AI, France and Germany are among the most active countries and the European Commission is also working to promote the spread of AI. Thanks to the collaborations that Fintech District has established with international innovation hubs, at the first of our Fintech Nights we were able to tell about the startups in other countries offering interesting AI-based businesses including Feedzai (by Portugal Fintech), Lingua Custodia (by LHoFT), Yields (by B-Hive), 2021Tec.AI (by Copenhagen Fintech) and e-bot ( by Techquartier).

In the Fintech District community there are many startups that use AI. Our community manager Stefania Barbato has identified the 3 emerging trends investigating among the 111 startups – Robo-advisors, Alternative data and Cybersecurity – and has explained them through concrete examples, respectively Moneyfarm, FinScience and Talos.

Obviously, the following wave of AI and automation will transform financial services over the next few years. Mico Curatolo explained that companies using AI to improve business processes will reap clear competitive benefits. There are hundreds of opportunities that could be enabled by the deployment and development of AI in financial institutions.

So, how can I get hold of them and not be left behind? ING, CITI and AXA have done so in three different sectors by opening up and focusing on applied innovation, with excellent results. This can also happen in Italy with our support and it is not only a promise because we have the evidence: the Data Driven Competition.

The evening continued with the evocative and inspirational intervention of Samsung. Antonio Bosio (Product & Solutions Director for Samsung) excited the audience with a video showing how artificial intelligence can be a key factor for digital inclusion. Then he told about its impact on three different areas: languages, services and devices

Raffaele de Lucia (Manager of Watson and Cloud Acceleration Team IBM) introduced “IBM Watson, between false myths and great potential”. As the volume of data, digital transformation, and the pace of technological change accelerates, the ability of organizations and professionals to keep up and capitalize on the opportunities is becoming more challenging” he explained. “AI provides an opportunity to help professionals close this gap and harness the full potential of data by creating new tools to improve their work and outcome”. The use of Al is increasing but there are some difficult challenges concerning regulatory constraints and lack of technological skills to face.

Alessandro Vitale, Member of the Board of Coordination of the Task Force for AI in the PA and CEO of Conversate, explained his point of view. Vitale argues that 2019 is the year for large companies and banks to invest in AI in order to have a clear advantage over competitors in the coming years. AI offers new services and new ways of interacting with customers and initiates a structural change for banks. Those who use it can have many advantages but must face two non-trivial challenges, one organizational one, for setting up the collaboration man-algorithm, and one of the processes, because AI requires rapidity

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The evening ended with 5 startups from the community talking about how they actually use AI and how they aim to use it with future partners. We invite you to discover them on our community page and leave them to speak. In the following video pills, they share with us their thoughts on the future of AI

Swascan

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Axyon AI

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Wavenure

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Modefinance

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Cardo AI

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After so many words, here is a roundup of images of the evening.

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