CaixaBank, a financial group, in Spain, and D-Wave Systems Inc., a global leader in quantum computing systems, software and services, and the only vendor to create both “quantum annealing” computers and gate model quantum computers, have announced the commercial results of two major hybrid financial quantum computing applications for investment portfolio optimization as well as investment hedge calculations.
Thanks to this collaboration, these hybrid quantum applications significantly reduce the computation time required to solve complex financial problems, which strengthens the optimization of the investment portfolio, while increasing the internal rate of return (IRR) of the investment portfolio.
VidaCaixa, CaixaBank’s life insurance and pensions company, leveraged quantum cloud service and hybrid quantum solving tools, Leap ™of D-Wave, which combines the strengths of classical computing and quantum computing, to create a quantum computing application as part of the selection and allocation of its investment portfolio, all, part of its portfolio hedging efforts.
Through this project, CaixaBank Group becomes the first well-known financial services company in the world to apply quantum computing to investment coverage in the insurance sector. The group is currently studying the possibility of using this application in the service of regular production, not only at VidaCaixa, but also in other branches of the organization, in the coming months.
The CaixaBank Group team used the services of hybrid quantum solvers, from D-Wave, to code a faster algorithm, which significantly reduced the computation time required to arrive at an optimal solution for improving portfolio coverage. of investment. What previously required several hours of computation for the bank has been reduced to just a few minutes thanks to quantum technology, thus offering a reduction in computation time of up to 90%y, compared to the traditional solution.
This reduction in the calculation time makes it possible to obtain an increasing complexity of modeling, which results in a more dynamic model and better adapted to the markets in real time; it optimizes the capital invested while maintaining constant levels of risk;
Regarding the selection and allocation of the investment portfolio, the algorithm quickly generates portfolios that can be optimized in the face of a greater diversity of constraints, and this, in a shorter time. The result is a successful application that optimizes the IRR by 10% for a given bond portfolio.
“We’ve always been an innovation-first organization, and we realized early on that investing in quantum computing could enable us to deliver cutting-edge products and services more efficiently, to provide customers with the best possible experience. This is the case through this POC (proof of concept), which confirms the bank’s status as the first bank in Spain, and one of the first in the world, to integrate quantum computing into its daily activities. “says Gonzalo Gortazar, CEO of CaixaBank. As part of its participation in a commissioning ceremony, which took place in Jülich, Germany, where D-Wave announced its first cloud-based Leap quantum system outside of the United States at Forschungszentrum Jülich Supercomputing Centre, Gortazar confirmed CaixaBank’s commitment to continue exploring the potential of quantum computing in the financial services sector: “We are very pleased to see this sector grow and mature, and look forward to increasing our investment and our efforts in quantum computing, which will certainly revolutionize our sector. We are delighted to work with D-Wave throughout this process. » which will certainly revolutionize our sector. We are delighted to work with D-Wave throughout this process. » which will certainly revolutionize our sector. We are delighted to work with D-Wave throughout this process. »
“Our focus has always been on developing and delivering quantum computing for practical applications, as well as creating business value,” said Alan Baratz, CEO of D -Wave. “The finance industry is currently undergoing a massive transformation, which is why the industry is poised to reap a major business advantage from investment in quantum computing. CaixaBank has a clear vision in implementing market-ready quantum applications to drive efficiency, customer value, and scale-up. We look forward to continuing our collaboration with this company as it expands its offerings and identifies new use cases for quantum computing. »
CaixaBank’s quantum adventure
In 2019, CaixaBank set up a team of specialists, made up of computer technicians, mathematicians and risk analysts, in charge of innovation in the quantum field, according to a multidisciplinary approach, in order to explore the potential of quantum technology on the way to improving the bank’s various capabilities in various areas, such as risk assessment and extreme risk simulators, fraud detection through artificial intelligence and machine learning, secure quantum cryptography, portfolio selection and allocation, and data mining optimization.
One of the first projects involved implementing a quantum algorithm capable of assessing the financial risk of two portfolios created specifically for the project, based on real data, one consisting of mortgage loans, the other of goods of treasure.
In 2020, CaixaBank created the first machine learning algorithm for risk classification purposes, through quantum computing, in the Spanish banking sector. In this case, CaixaBank combined quantum computing and conventional computing in different phases of the calculation process, in order to classify credit risk profiles. To do this, CaixaBank used a public data set corresponding to 1,000 artificial users, presenting a profile similar to that of existing customers, but with information configured specifically for this test.
As part of this project, CaixaBank used the quantum cloud service, Leap to access the hybrid quantum solver service, from D-Wave, including the quantum computer Advantage™. The real-time cloud access service enables companies such as banks, and many others across industries, to solve large, complex enterprise-scale problems. To date, D-Wave customers have created several hundred early applications using their systems, including protein folding, financial modeling, planning, logistics, manufacturing optimization, machine learning, and route optimization, among other areas.
