Terra Quantum and HSBC announced a collaboration to explore Hybrid Quantum technologies applications on optimization challenges for business impact. The project’s objective is to demonstrate the potential for a hybrid quantum solution for optimization challenges, a widespread and highly complex suite of issues in financial services.
One example of such an issue is collateral optimization. Collateral optimization is the process of efficiently allocating and managing collateral assets to meet regulatory requirements while minimizing costs. It utilizes mathematical and algorithmic strategies to balance risks, liquidity, and profitability.
Existing methods for collateral optimization primarily rely on linear optimization solvers, which can sometimes falter when confronted with higher complexities. The quantum approach could potentially excel beyond traditional methodologies, by effectively handling high-dimensional optimization problems and potentially better scalability.
Vishal Shete, managing director UK at Terra Quantum, said in a statement: “Optimization of capital is one of the core functions in a bank, Quantum technologies have the potential to enhance optimization solutions across many parts of a financial institution.”
The initial approach includes reformulating the problem as a Quadratic Unconstrained Integer Optimization (QUIO) problem and applying a proprietary solver TetraOpt, which functions as an enhanced search and optimization tool. This could tackle higher dimensionality and non-linear constraints better and thus optimize and increase efficiency.
Steve Suarez, founder & CEO of HorizonX as well as an external advisor at Bain & Company and, until recently, the global head of Innovation, Global Functions at HSBC, said in a statement: “Together we have explored the ability and readiness of hybrid quantum to take on large scale, business critical problems and create transformational impact.”
Markus Pflitsch, CEO and chair at Terra Quantum, said in a statement: “Working with HSBC allows us to apply our cutting-edge technology to real world use cases at a world class leading financial institution. Hybrid quantum algorithms will revolutionize large scale intractable optimization tasks in the future. We want to demonstrate some of that potential already today”.