Moody's Analytics: Financial Firms Acknowledge Future Quantum Threats and Opportunities, But Remain Underinvested in Quantum Computing

Insider Brief

Moody’s Analytics report finds financial firms are underinvesting in quantum computing, with 87% lacking budget.
The report shows that 56% of respondents saw the rise of quantum computing as a threat or an opportunity.
73% are yet to define the real commercial advantage that quantum technology can bring.

Financial firms are underinvested in quantum computing, according to a new report from Moody’s Analytics, even though more than half of respondents — who are data, analytics and innovation leaders in major financial services and banking
firms — see quantum poses both valid opportunities and threats.

“Quantum Computing still needs more work to make a dent on financial institutions budgets,” said Sergio Gago – Managing Director of AI and Quantum Computing, Moody’s Analytics. “Even though we can see claims of how many corporates are investing into this, the reality is that the vast majority are not even thinking on budgeting, mainly because they are not aware of what advantages it could bring. This reveals that a lot of the effort needs to be on education and preparation rather than short term ROI expectations.”

In the report, the analysts found that 87% of respondents lacked a budget for quantum and 73% could not identify current bottlenecks that required quantum advantage.

Although financial firms lacked a budget for quantum — and the report identifies some trepidation of quantum hype among its respondents — more than half saw quantum as either a potential advantage to seize, or a possible threat to be mitigated.

The report shows that 56% of respondents saw the rise of quantum computing as a threat or an opportunity, with 31% seeing it as primarily an opportunity and about 13% viewing quantum as a threat.

For the analysts, this points to the need for firms to conduct due diligence for their future quantum strategies.

The report advises: “As such, financial firms should focus on research and experimentation to determine the commercial value of quantum computing and make informed investment decisions.”

The report also shows that 82% of respondents consider the immaturity of quantum technologies to be the most significant operational challenge for developing quantum computing capabilities. Only 14% of respondents are actively developing quantum computing capabilities either in-house or with external partners.

Use Cases

The respondents see plenty of ways quantum could help financial firms — but the report cautions business leaders to tone down their expectations.

The top five high-potential use cases for quantum computing include: risk analysis (67%), stress testing (59%), cybersecurity (54%), synthetic data (49%), and for the detection of fraud and money laundering (34%).

Quantum artificial intelligence and machine learning is of deep interest to the financial services community, according to the report. Interestingly, while 88% of respondents reported machine learning and optimization as problem categories in which
quantum technology could present an opportunity in future, fewer than 10% have started addressing it.

Despite the interest — and the obvious connections between quantum’s innate computational strengths and the financial industry’s unique computational challenges — analysts and respondents recommend business leaders perform sober expectation-setting.

The report states: “While quantum computing promises significant transformations in the financial services industry, it is crucial to approach its potential with a sober outlook. Near-term applications like machine learning and optimization offer the most immediate opportunities for the industry to benefit from quantum computing.”

Post-Quantum Preparation?

While the “hack now, decrypt” later is often cited as a reason to place post-quantum cybersecurity on the top of the list of quantum use cases, the analysts found most organizations are unprepared for quantum computing to crack current encryption methods. However, the respondents recognize its dawning importance.

According to the report, 86% of financial firms are not ready for post-quantum cybersecurity, although 84% foresee the need in the next 2-5 years.

Methodology

To undertake the study, analysts uses both quantitative and qualitative approaches. The quantitative portion of the study included a survey that posed 15 multiple-choice questions using a phone-assisted online survey to 200 data, analytics and innovation leaders in financial services and banking firms from 17 European and North American countries. All respondents come from firms with no less than $100 million USD in annual revenue. Titles of participants include: Chief Technology Officers, Chief Data Officers, Chief Data and Analytics Officers and Heads or Directors of Innovation. The findings of this research were complemented by analysis and commentary from six industry experts with whom we conducted in-depth telephone interviews.