If harnessed correctly, quantum computing will significantly transform the finance industry, bringing into the realm of possibility incredibly complex calculations that will drastically improve financial services. Now, Goldman Sachs has recently shared that it has made major developments that will bring forth this reality within the next five years.
A great prize will go to the bank that first cracks the code on quantum computing and incorporates this into its financial services. Goldman Sachs has now emerged as a leader in this race, having reportedly been working deeply with Silicon Valley firm QC Ware to make developments on this over the past several years. Its recently announced breakthrough has revealed that, used for financial application, the quantum computing offering would outperform even the most advanced algorithms that the industry has relied on for generations. When realized, the quantum computing technology will be able to accelerate the resolution of the most complex calculations known within the financial markets.
Together with QC Ware, Goldman Sachs has been designing innovative quantum algorithms with the goal of outperforming state-of-the-art classical algorithms to outperform traditional binary computers for financial software. Specifically, both companies have been looking deeply into how quantum computers can be used for the highly complex Monte Carlo algorithm that can assess risk as well as simulate market prices for a range of financial instruments. Since these calculations would take place overnight, traders are normally left with no choice but to use outdated results in highly volatile markets. Should these algorithms be sped up to be calculated much sooner, traders will have that ever elusive edge that will help them outperform others in the game of beating the market.
If successful, the algorithms within their algorithms will be able to outperform Monte Carlo simulations with exceptional competence. However, earlier research with IBM last year revealed to Goldman that they would need a quantum computer with about 7,500 quantum bits, or qubits, to run a full Monte Carlo simulation. This will result in a massive 1000x increase in performance comparative to any method used currently. This innovation will create a seismic change in the financial markets.
IBM and Google are also in the race to build such systems. However, despite the excitement, it has already been found that they use qubits that are only able to maintain quantum states briefly, rendering the system to be heavily prone with errors.