Cybersecurity is a key enabler of consumer experiences, risk management, and supply chain orchestration for the financial services sector. However, new security threats are appearing as a result of open digital infrastructures and accelerated business transformation, necessitating a significant improvement in security protocols.
Quantum computing’s ground-breaking capability to swiftly solve the challenging math problems that form the basis of various forms of encryption may result in new weaknesses in the data security field. This necessitates the creation of novel encryption methods and strategies resistant to post-quantum methods, like Shor’s algorithm.
Putting money towards post-quantum cybersecurity is a wise long-term move to offer more reliable protections for sensitive and private data. Enterprise executives in the financial services industry and elsewhere can profit from investigating post-quantum’s capabilities and figuring out how it might help them protect customer information in an exponentially more effective way even though post-quantum cryptography standards are still being finalized.
Working with Wells Fargo, the National Institute of Standards and Technology (NIST), and other standards bodies hopes to learn more about how post-quantum cryptography (PQC) might safeguard cyberspaces. Wells Fargo is one of the pioneers in researching quantum capabilities and threats in financial services. Although the quantum future may be at least a decade away, this forward-thinking strategy demonstrates how to develop a solid defensive foundation by investigating quantum tactics and working with creative players.
The quantum advantage
Though not entirely new, worries are growing about the potential capability of upcoming quantum computers and the requirement for post-quantum cryptography. To establish a public-private co-development ecosystem and pave the way for the transition to quantum-safe encryption, NIST released a request for submission for quantum-safe cryptographic algorithms back in 2016. This marked the beginning of a multi-year process of competitive research.
In 2019, the possibility of quantum computing was made known to Wells Fargo. Working along with academic research teams, the financial services corporation was investigating the risks of post-quantum cryptography and the possible benefits of employing quantum computing in the development of AI at the time. Wells Fargo is currently a partner in the IBM Quantum Network, investigating the creation of useful financial services applications using IBM Quantum technologies and working with IBM scientists and other network participants.
Two different events, both of which are part of the quantum advantage, will enable quantum computers to address issues that are currently insurmountable for conventional machines. The first is superposition, which is a quantum system’s capacity to simultaneously express several states with fewer classical bits. As a result, a quantum computer may represent an exponentially bigger range of states than a conventional computer, which enables the system to handle much larger tasks.
The second important quantum phenomenon is entanglement, which happens when a pair of qubits can act causally, meaning that changing the state of one immediately affects the other. New communication patterns within a quantum system are made possible by the phenomenon of quantum entanglement, which is far faster than traditional data transport. Despite the seeming triviality, the system as a whole can accelerate exponentially thanks to the dramatic reduction in state transfer time.
Quantum computers can therefore solve problems that traditional computers are unable to, such as those involving intricate optimization procedures or very large stochastic processes (i.e. processes with a high degree of randomized behaviors), such as those present in the modeling of common what-if scenarios.
“We got into quantum from the perspective of quantum-safe cryptography and then quickly branched into discovering how some quantum techniques are also very effective in a classical environment,” says Chintan Mehta”
Wells Fargo’s chief information officer for digital technology and innovation. Everyone needs to approach quantum theory from that angle. Is there a quantum technique I can utilize to speed up my present computing and data techniques, rather than “How can I get a super powerful quantum computer?”
Quantum techniques may offer significant promise for efficiency advantages for a variety of financial application cases. For instance, quantum computers could quickly execute Monte Carlo simulations to find the ideal stock portfolio. The simulations examine the risk-and-return trade-offs on various investment combinations to build a portfolio based on the objectives and risk tolerance of the customer.
The power of quantum cybersecurity
The strength of quantum computing also poses a challenge to a significant portion of the current cryptography ecosystem. Asymmetric key structures (such as pairs of related keys—one public key and one private key) are used to encrypt and decrypt a message and protect it from unauthorized access or use in current cryptographic protocols that safeguard the majority of private communications and transactions worldwide (everything from HTTPS, digital signatures, and signing of security certificates).
The most popular asymmetric algorithms are based on challenging mathematical issues like factoring big numbers, which can take even the most powerful supercomputers of today hundreds of years to complete. But about quantum computers, this is not the case: By “guessing” the prime factors utilized in the encryption, they could break the key infrastructure using Shor’s technique and give an exponential improvement in prime factorization speed.
Even though commercially viable quantum computers that can run Shor’s algorithm are not yet available, beginning quantum-safe cybersecurity solutions can already provide considerable benefits. Even the most potent classical or quantum computers would not be able to break quantum-safe encryption.
“According to Mehta, failing to use quantum capabilities could expose you to attack from threat actors that have access to quantum knowledge and resources and who could then compromise your infrastructure and quickly access the data.”
After careful consideration and testing, NIST selected a few algorithms in July 2022 as potential standards for the majority of quantum use cases, including CRYSTALS-Kyber for key establishment and CRYSTALS-Dilithium for digital signatures. These algorithms have several advantages, including serving as the foundation for ID-based encryption and, most importantly, being resistant to attacks from a future quantum computer. It is quite likely that the first set of fully industrialized quantum systems will be deployed by national governments and most likely for defensive (perhaps offensive) capabilities. This is due to the cost implications and potential security implications of functional quantum computing ecosystems.
Outside of that context, the heart of value creation will probably revolve around quantum computing’s potential to accelerate mathematical operations in machine learning and AI. For financial institutions, managing fraud is one use case that is fundamentally crucial and increasingly depends on AI-based solutions. With continually changing fraud vectors, fraud detection systems remain highly probabilistic; according to some estimates, fraud models produce 80% false positives, necessitating numerous manual levels of further testing to identify fraud. Quantum computers are projected to excel at data modeling, which will allow them to analyze complicated data structures for patterns, perform classifications, and more precisely identify fraud vectors.
Taking the quantum leap
Mehta believes that financial organizations that are already investigating the potential of quantum computing would gain greatly. But the most important first step is separating fact from fiction and improving our comprehension of what quantum does and is capable of. Companies can then acquire the ability to envision a viable solution after having those insights in hand. Companies could begin by responding to some of these fundamental inquiries:
- Which areas of the company are computer resources constrained?
- Is it valuable to the consumer to address those restrictions differently?
- Which business processes and customer transactions will be in danger as a result of quantum capabilities?
- How will the current technological stack change once quantum capabilities are deployed?
- How will a quantum system interact with the current systems and personnel?
- What brand-new abilities are needed to create quantum algorithms?
“To differentiate between the hype and hypotheticals from the core realities of quantum, Mehta argues that it is imperative to have a basic understanding of quantum capabilities.”
The possibility of businesses having their quantum computers is quite slim. Mehta predicts that the technology will be cloud-based and centralized among a small number of significant firms. Therefore, instead of developing their quantum computing infrastructure, firms should concentrate their efforts on finding answers to business problems. Businesses should evaluate potential dangers across their entire organization, deciding where to best implement post-quantum cybersecurity techniques and cutting-edge security solutions, for instance.
Wells Fargo is a part of a network of Fortune 500 businesses, start-ups, academic institutions, and research labs called the IBM Quantum Network, which works together to enhance quantum computing and investigate its practical applications. Although it will be years before success is measured by the deployment of quantum systems that can deliver applications that outperform classical systems, early research into quantum computing and AI advances will ultimately rethink the financial sector and make banking faster, easier, and safer.