HSBC has claimed a major breakthrough in applying quantum computing to financial markets. On Thursday, the bank said that experimental trials with IBM had delivered a 34% improvement in predicting bond trading outcomes. The trial is being touted as the first piece of empirical evidence that quantum hardware can deliver real-world value on the trading floor.
Quantum computing’s potential remains mostly theoretical, with many breakthroughs demonstrated under controlled conditions rather than in real-world trading. So far, these have largely been proofs of concept, showing promise without widespread practical application. Quantum chips take advantage of subatomic, quantum-level “uncertainty” that allows them to process multiple tasks in parallel. Traditional analog chips process tasks sequentially, and are thus far slower. Quantum computing can solve problems in minutes; analog chips would take hours, days or years to process the same calculations.
HSBC and IBM’s results were also derived from historical data rather than live trades, but the study does indicate that quantum computing could be useful for real-life markets. The trial was in collaboration with IBM and its Heron chip—the company’s latest and highest-performing quantum processor. It analyzed more than 1 million quote requests across 5,000 corporate bonds between September 2023 and October 2024.
The bank said the quantum-enabled model significantly outperformed standard classical techniques in estimating how likely a customer order would be filled at a quoted price. In over-the-counter bond markets, where assets are traded directly between counterparties rather than on centralized exchanges, even small gains in predictive accuracy can offer a competitive edge. IBM’s stock jumped 5% on Thursday following the announcement.
“We have been relentlessly focused on the near-term application of quantum technology, and given the trial delivered positive results on current quantum computing hardware, we have great confidence we are on the cusp of a new frontier of computing in financial services, rather than something that is far away in the future,” Philip Intallura, HSBC Group Head of Quantum Technologies, said.
“This is a ground-breaking world-first in bond trading. It means we now have a tangible example of how today’s quantum computers could solve a real-world business problem at scale and offer a competitive edge, which will only continue to grow as quantum computers advance,” he added.
Intallura predicted it would create a “flurry of activity” as rivals ramp up efforts to integrate the technology. Miklos Dietz, senior partner and managing partner of McKinsey’s Vancouver office, told Bloomberg: “If one bank is able to start using quantum computing to develop a program, then the others will be developing it the next day and people will not sleep until they have it.”
“This exciting exploration shows what becomes possible when deep domain expertise is integrated with cutting-edge algorithm research, and the strengths of classical approaches are combined with the rich computational space offered by quantum computers,” Jay Gambetta, Vice President, IBM Quantum, said in a statement.
Quantum computing in the finance industry
Quantum computing has the potential to transform multiple industries, ranging from pharmaceuticals to weather forecasting, by solving complex problems that classical computers cannot efficiently handle.
Big Tech companies, including Google, Microsoft, and IBM, have all announced various quantum computing breakthroughs in the last year, and excitement around the emerging technology has increased. For most businesses, the main interest lies in whether quantum computing can speed up processes or give them a competitive edge, rather than tackling problems impossible for classical computers.
For example, banks do a daily risk calculation called Value at Risk (VaR). Traditionally, it took all night to run on classical computers, but some early quantum trials suggest the same calculation might be done in minutes.
However, quantum computers also pose a significant risk to encryption systems, relied on by financial institutions such as HSBC, as they could eventually break the codes that protect things like online payments and customer data.
Quantum computers could eventually crack widely used encryption methods like RSA and ECC, putting online payments and sensitive customer data at risk. To get ahead of some of these threats banks and tech firms are developing post-quantum cryptography, which are new algorithms built to withstand attacks from quantum machines.