Quantum computing promises to transform how financial institutions process information, manage risk, and secure data. While full-scale quantum computers aren’t yet commercially available, their development is accelerating, creating both risks and opportunities in financial services.
This article reveals how investment firms, asset managers, and other financial institutions can prepare for the quantum future. We’ll explore how firms can implement defensive measures against quantum threats while positioning themselves to capitalize on quantum’s computational advantages.
The Quantum Revolution: Timeline and Projected Impact
Quantum computing represents a fundamental shift in computational power and capability. Unlike classical computers that use bits (0 or 1), quantum computers utilize quantum bits or “qubits.” These leverage quantum phenomena like superposition and entanglement to process complex calculations.
“A system of 300 qubits can reflect more states than there are atoms in the universe, theoretically delivering computational power far beyond anything classical computers can achieve,” explains KPMG in their recent quantum computing in financial services analysis.
Now, quantum computing is on track to “create $450 billion to $850 billion of economic value globally” by 2040. It will sustain a “$90 billion to $170 billion market for hardware and software providers,” Boston Consulting Group (BCG) reports. They forecast market maturation in three phases: “noisy intermediate-scale quantum (NISQ) until 2030, broad quantum advantage (2030-2040), and full-scale fault tolerance (after 2040).”
For financial institutions specifically, investment is ramping up rapidly. Deloitte Insights projects that “the financial services industry’s spending on quantum computing capabilities is expected to grow 233x from just $80 million in 2022 to $19 billion in 2032, growing at a 10-year CAGR of 72%.”
As we will discuss, this increase means quantum computing presents opportunities but also defensive necessities for financial firms.
Financial Services Firms Must Begin Facing the Quantum Threat
The most urgent concern for financial institutions is the threat quantum computers pose to current cryptographic systems. McKinsey’s research suggests that “a full-scale fault-tolerant quantum computer,” which could exist as soon as 2035, “would be able to decrypt currently available cryptographic protocols.” No matter the timeline, decision makers should start preparing now for this inevitable future.
Indeed, attackers are already implementing what the National Institute of Standards and Technology (NIST) describes as a “harvest now, decrypt later” approach. They are collecting encrypted data to decrypt it once quantum computing capabilities mature. “Hackers [have] the intention of decrypting the data retroactively using a commercially available quantum computer, making this cybersecurity threat a current, not future, problem,” Deloitte Insights explains.
The potential financial impact is staggering. The Wall Street Journal’s CIO Journal cites research indicating that “a single quantum attack that disrupts access to the Fedwire Funds Service payment system for one of the five largest financial institutions could lead to cascading financial failures affecting the U.S. gross domestic product to the tune of $2 trillion to $3.3 trillion.”
Again, Financial institutions cannot afford to delay their quantum security preparations.
As the World Economic Forum suggests, “Expert forecasts and government advisories urge industry stakeholders to proactively adopt robust encryption and global regulatory frameworks to ensure readiness for an anticipated heightened quantum threat by 2035.”
Quantum-Resistant Cryptography Has Emerged as an Essential Defense Strategy
The primary defense against quantum threats is implementing quantum-resistant cryptography—what NIST describes as post-quantum cryptography (PQC). This refers to cryptographic algorithms designed to withstand attacks from both classical and quantum computers.
“Post-quantum cryptography (PQC) and quantum key distribution (QKD) are the leading approaches to making data quantum-safe,” explains McKinsey. PQC algorithms are classical, quantum-resistant algorithms, while QKD uses quantum properties to establish secure communication channels.
Implementation will require significant investment. According to CIO Magazine, “When quantum computers move beyond the Noisy Intermediate Scale Quantum (NISQ) devices they occupy today, the Terra Quantum software can also translate to those platforms.” This highlights the importance of selecting solutions that can evolve with the technology.
Today, NIST is operating a fourth round of post-quantum cryptography standardization, calling on the public via a “competition-like process” to supplement its past standardizations—a process that could continue with additional rounds and updates. For financial firms, the World Economic Forum’s recent white paper provides valuable, industry-specific guidance. The report provides guidelines and a roadmap for quantum security specific to the financial services sector. Both of these efforts underscore the importance of public-private collaboration in addressing quantum security challenges.
Emerging Applications and Competitive Opportunities in Financial Services
While security concerns create urgency, quantum computing also presents new and exciting opportunities for financial modeling and analysis. In a recent article from MIT Open Learning, MIT professor Aram Harrow identifies three key areas where quantum computing could make the biggest impact: “machine learning, secure communication, and risk management”; specifically:
- Complex ML models beyond what traditional computers can train
- QKD models with unprecedented security and trust
- Predictive models that help financial firms avoid difficult-to-detect events
Value-Adding Use Cases for Financial Firms
Quantum use cases are already emerging among the most ambitious financial firms and their quantum-specialist partners. CIO Magazine reports how financial institutions are already exploring quantum applications:
A team of engineers and analysts adopted quantum computing with a focus on Exchange-Traded Funds (ETFs), “which comprise hundreds of thousands of equities that make up a certain return over a period of time.” Using a method called “quantum annealing,” Ally was able to “select a smaller number of stocks with predictive return and lower operational and transaction costs.”
Derivative pricing is another promising application. The article also highlights how Cirdan Group and quantum-as-a-service company Terra Quantum addressed the challenge of pricing exotic derivatives. The company achieved “a 75% reduction in computing time—from 10 minutes to 2 minutes—with the same accuracy” as past successful methods.
McKinsey identifies several additional high-value use cases across business units in finance:
- Corporate Banking: credit-decision algorithms and collateral optimization
- Risk Management: risk reduction and risk-related regulatory reporting
- Investment Banking: Digital twins featuring more expansive investment simulations
Indeed, KPMG considers financial services an ideal space for adoption. The sector includes a wide range of products and regulatory requirements, both of which present extensive applications and opportunities. Firms that develop quantum capabilities now may gain a significant competitive advantage as the technology matures.
Develop Your Quantum Computing Readiness Roadmap
As you consider quantum preparedness for your firm, you may find it difficult to know where to begin. A step-by-step approach can help financial institutions like get started:
- Align with key stakeholders: Demonstrate the need to build quantum capabilities now to get ahead of emerging risks and opportunities.
- Engage all business units: Involve every business unit to identify broad applications and foster organization-wide preparedness. Even as some units become more involved than others, all teams should be prepared for your quantum future.
- Take practical steps towards adoption: Learn about quantum technologies, connect with vendors and integrators, and develop a clear quantum strategy.
- Pilot use cases: Explore and (where possible) experiment with quantum applications, such as advanced derivative pricing or risk simulations.
- Choose a Strategic Path: Decide whether to build in-house expertise, invest in or acquire quantum startups, or partner with quantum providers.
By following these steps, you can position your firm for steady progress as quantum technology evolves.
Secure Your Quantum Computing Future
The financial sector stands at a critical juncture. It’s still unclear when quantum computers will reach full maturity; even so, the industry cannot afford to wait.
“It’s important for us to test the technology and be ready… like constantly working out and doing your sprints so when the real race happens, you’re ready to go,” Sathish Muthukrishnan, Chief Information, Data, and Digital Officer at Ally Financial, told CIO Magazine. “You can’t sit around and wait for things to happen—it’s all about consistency, preparation, and then being able to rise to the occasion when the time is right.”
In these ways, quantum computing preparedness is not just about technological adaptation—it’s about strategic positioning for the future. Financial institutions that begin their quantum journey today will be better equipped to protect their assets, serve their clients, and thrive in the quantum era of tomorrow.
Taking the Next Step on Quantum Computing
Option One Technologies helps investment companies, hedge funds, equity firms, and asset managers prepare for emerging technologies in the financial services industry. Contact us to learn how our cloud, cybersecurity, and other offerings can support your firm on your readiness journey.
