Terra Quantum and HSBC form a collaboration to explore hybrid quantum technology applications on optimisation challenges for business impact.  

As quantum technology evolves, early adopters like HSBC are poised to explore the potential benefits of increased efficiency, cost reduction and a competitive edge. A McKinsey report predicts that quantum computing may bring significant value to the financial services industry, with an estimated potential to create around $700 billion.   

Steve Suarez, who was until recently, the Global Head of Innovation, Global Functions at HSBC said: “It’s been super exciting working in the quantum space with companies like Terra Quantum and its suite of cutting-edge hybrid quantum algorithms. Together we have explored the ability and readiness of hybrid quantum to take on large-scale, business critical problems and create transformational impact.” 

Potential to enhance optimisation

The project’s objective is to demonstrate the potential for a hybrid quantum solution for optimisation challenges, a widespread and highly complex suite of issues in financial services. One example of such an issue is collateral optimisation. Collateral optimisation is the process of efficiently allocating and managing collateral assets to meet regulatory requirements while minimising costs. It utilises mathematical and algorithmic strategies to balance risks, liquidity and profitability.  

Existing methods for collateral optimisation primarily rely on linear optimisation solvers, which can sometimes falter when confronted with higher complexities. The quantum approach could potentially excel beyond traditional methodologies, by effectively handling high-dimensional optimisation problems and potentially better scalability.   

Vishal Shete, Managing Director UK at Terra Quantum, said: “Optimisation of capital is one of the core functions in a bank. Quantum technologies have the potential to enhance optimisation solutions across many parts of a financial institution, we look forward to realising the benefits of this in the near-term future.”  

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The company’s initial approach includes reformulating the problem as a QUIO: Quadratic Unconstrained Integer Optimisation problem and applying its proprietary solver TetraOpt: which functions as an enhanced search and optimisation tool that can tackle higher dimensionality and non-linear constraints better and thus optimise and increase efficiency.