Just when you thought you had a handle on artificial intelligence (AI), here comes a twist on the technology. Because AI is being merged with quantum computing ahead of schedule. The result could have significant implications for financial services as well as other verticals.
“The physical world is defined by quantum mechanics,” Chris Hume, senior director of business operations for SandboxAQ, told PYMNTS. “The more effectively we can understand those interactions and then model those interactions, the more efficiently and effectively you can build predictive models. With the algorithms that we’re developing combined with the classical computer hardware that’s available today, you can build better predictive models, and that’s the exciting part. And that’s the opportunity at hand.”
SandboxAQ has termed its AI-quantum computing hybrid AQ. Quantum computing as a holistic approach to data is years away and, as Hume said, even scientists who work on quantum computing models might not completely understand the concept. But you don’t need a degree in physics to understand the basics of how quantum principles are being deployed before the full version of the technology arrives. There are many definitions available, but perhaps the most helpful illustration is in the context of financial services.
Suppose an investment banker is working on crafting a strategy for a wealthy client. That banker has an infinite number of choices to make, each having specific potential outcomes. Traditional investment analysis explores this landscape step by step and will assess each investment strategy to determine the best outcome. It’s a reliable method. But it has potential flaws in today’s volatile and fast-paced market, especially now that AI has revolutionized predictive investment analytics in a short period of time. Instead of evaluating investment strategies individually, quantum computing evaluated them simultaneously due to two principles at the center of quantum mechanics: superposition and entanglement.
Let’s unpack those two concepts. Superposition allows a quantum bit (qubit) to exist in multiple states at the same time. This means a quantum computer — or quantum computing capabilities — can process complex, overlapping scenarios simultaneously, rather than sequentially. So, the investment banker would be able to assess the outcomes of diversifying a client’s portfolio into instruments like equities, bonds, commodities, and real estate all at once, rather than one by one.
Entanglement enables qubits to be interconnected and could evaluate whether an investment increases or decreases in value over time. It mirrors the interconnectedness of global financial markets, where a change in one market segment or geopolitical event can affect asset values and consequently investment strategies.
Now add AI. SandboxAQ uses quantum sensing with advanced AI to unlock insights in financial services, navigation, medical devices, imaging and other areas. Quantum sensing detects minute, atomic level changes in the physical world, including motion, electric and magnetic fields that would otherwise be undetectable.
For example, quantum sensory technology is in use in the healthcare industry to make MRIs even more detailed that its current use would allow. Using those sensors produces more data. That new dataset requires AI to interpret it and make it usable to a clinician and the patient. It also has shown early applications in the navigation and transport industries. For example, Airbus’ navigational technology arm Acubed is using AQ and quantum sensing to sharpen flight path readings and to develop autonomous planes.
“AQ is a technology for the present as well as the future,” Hume said. “It will still be relevant once quantum computers are fault tolerant, error corrected, able to reliably deliver results. But right now, AQ is a bridge to that future.
“The way that comes to life is with simulation. AI simulation is probably where its most visible. It’s where we’re using the latest generation of hardware and creating the manifestation of these quantum principles.”
Hume’s company has some serious credentials and proof points to bring these concepts home. After being spun out of Alphabet in March 2022, a series of high-profile moves have put it into the forefront of the AI field, including a $500 million funding round in February 2023.
In September 2022, the company acquired Cryptosense as a way to accelerate delivery of security solutions to global organizations. Its second acquisition was Good Chemistry, which is an AI accelerator and simulator in the drug discovery and design field. It also struck a partnership with Accenture in mid-January to explore quantum solutions to security issues from ransomware to social engineering fraud. It also presented a paper at The World Economic Forum in January, detailing some of the changes AQ could bring to the financial services industry.
That paper laid out three potential areas that will be disrupted by AQ: risk mitigation, fraud detection and portfolio optimization. The company believes quantum machine learning models can capture criminal or fraudulent transactions better than current alert-based systems.
Those same quantum-inspired algorithms can help optimize diversification and asset allocation, enhancing the performance and stability of portfolios. According to the company, this results in better returns and risk management for clients. It says HSBC is already using AQ to modernize encryption management to secure infrastructure, financial assets, intellectual property and customer information.
“The World Economic Forum was a very impactful time for us because we had a chance to educate a lot of people in a short amount of time on the applications we’re bringing to market,” Hume said.
“We see a lot of the concepts and ideas getting a lot of attention. Five years ago, at Davos, the conversations were around natural language processing and LLMs. Now we’ve moved past that. We’re trying to continue to educate the general public as well as corporate and government entities on the value, the benefits and some of the risks of all these new technologies.”