HSBC is collaborating with Terra Quantum on an experiment to test the use of quantum technology for optimising capital allocation.
The two firms have been exploring use cases for the technology in collateral management, using high grade mathematical and algorithmic strategies to balance risks, liquidity, and profitability.
Existing methods for collateral optimiation primarily rely on linear problem solvers, which can sometimes falter when confronted with higher complexities. The quantum approach could potentially excel in this regard, having the horsepower to handle high-dimensional problems at greater scale.
HBSC has been at the forefront of exploring the application of quantum technologies in the financial sector.
In July it became the first bank to join BT and Toshiba’s quantum-secured metro network - connecting two UK sites using Quantum Key Distribution (QKD) to prepare its global operations against future cyber threats.
The bank has also struck a multi-year deal with IBM to investigate the technology and is actively recruiting research scientists to build a dedicated capability within its innovation team.
In June, it also embarked on a long-term partnership with Quantinuum, the self-described world’s largest quantum computing company, with an initial focus on cybersecurity.