Ally Financial has partnered with quantum computing researchers to develop a new algorithm that uses quantum computing to enhance tracking of financial indicators.
Working with quantum computing solutions company Multiverse Computing and global consulting firm Protiviti, this digital financial services company has developed a method to automatically optimize its investment portfolio to achieve returns comparable to traditional portfolios.
Ally’s chief information, data and digital officer, Sathish Muthukrishnan, said the $186 billion Detroit-based bank has been experimenting with quantum computing use cases through its technology lab for more than a year. said.
“Quantum unlocks two things: the amount of data you can use and the concurrency of your model,” Muthukrishnan said in an interview. Quantum has allowed us to do this at a much faster pace, giving us the opportunity to take scenario analysis to a whole other level.”
Quantum computing processes data using quantum bits (qubits) that can exist in multidimensional states, whereas conventional computers are limited to storing information in binary form of 0s or 1s . Quantum computers allow us to sift through and analyze large numbers of numbers very quickly.
Ally has hired several quantum physicists and partnered with institutions such as Microsoft to research quantum computing on the tech giant’s Azure platform. For now, Muthukrishnan said the main goal is to partner with other companies and companies to discover use cases. Ally isn’t actually using quantum computing right now, but the CIO said the company is actively discussing when and how it might implement the technology.
Recent research, conducted over a year, shows that this hybrid of classical quantum approaches can build portfolios that outperform the target index’s risk profile by up to 2x while using fewer stocks. increase. The researcher’s Nasdaq 100 fund held one-fourth as many shares as a traditional portfolio and one-tenth as many as an S&P 500 fund.
In practice, financial institutions can use the algorithm to more quickly and accurately manage their ETF funds and generate revenue, said Konstantinos Karagianis, Protiviti Director at Quantum Computing Services. . Karagiannis said of the highlights of the project: Recently Published Research Papersis the limited amount of stock required for a quantum computer to outperform a traditional portfolio. Portfolio optimization can take up to 30 hours on some classical computers, but the new algorithm runs almost instantly on quantum computers, he added.
“Right now we’re looking at this customer advantage, the idea is that you look at what’s out there and feel that this is faster, better and cheaper,” Karagianis said. “For the first time ever, I want quantum to have something that has never existed before… There are trade-offs in all of this. I want quantum to give you everything.”
There are headwinds to using quantum computing. Quantum computers are not commercially available, That’s why companies are using cloud-based quantum computing-as-a-service products From companies like IBM, Microsoft, and in this case D-Wave. Moreover, only a handful of quantum computers in the cloud have the capabilities large companies need to run sophisticated programs, Karagiannis said. Developing algorithms that can run on quantum computers requires certain skills that not all quantum computers or programmers possess.
Still, Karagiannis says quantum has worthwhile use cases for applications that don’t require a real-time solution. Muthukrishnan added that he hopes Ally will lead the industry in quantum usage when quantum technology becomes more mainstream.
“We will continue our quantum experiments,” Muthukrishnan said. “We will continue to see how quantum computing can be used to leverage data and see what value we can add to our business and our customers.”
Sam Palmer, Head of Financial Engineering at Multiverse, co-authored the research paper with Karagiannis and Adam Florence, Director of Data Science at Ally.
