Ally explores fintech products using quantum computing with Microsoft

Microsoft today announced that fintech firm Ally will join the former's Azure Quantum program to explore how quantum computing can create opportunities in the financial sector. The two companies say that they'll apply research on quantum-inspired algorithms to understand ways they can be tapped to solve complex optimization challenges.

Experts believe that quantum computing, which at a high level entails the use of quantum-mechanical phenomena like superposition and entanglement to perform computation, could one day accelerate AI workloads compared with classical computers. Scientific discoveries arising from the field could transform energy storage, chemical engineering, drug discovery, financial portfolio optimization, machine learning, and more, leading to new business applications. Emergen Research anticipates that the global quantum computing market for the enterprise will reach $3.9 billion by 2027.

Using optimizers designed to run on classical hardware in the cloud, Ally says it'll be able to explore quantum use cases without having to invest in specialized hardware. Collaborating with Microsoft as part of its Enterprise Acceleration Program, Ally plans to begin developing quantum subject-matter expertise and fostering relationships with an ecosystem of quantum computing partners.

“We have been able to benefit from the deep experience of the Microsoft Quantum research team, learn about the types of problems quantum can help solve within the financial services industry, and begin developing quantum computing skills using Microsoft's quantum development kit,” Ally wrote in a blog post. “Through this relationship, we are gaining the insight and experience from Microsoft's leading researchers. Leveraging Microsoft's Azure capabilities, Ally has access to the software languages, APIs, and infrastructure to build quantum skills. This will open many exciting opportunities and empower us to explore the use of quantum computing technology across the landscape of financial services [applications].”

As for the problems Ally hopes to solve with quantum computing, they could address anything from knowing why a customer is likely to contact a call center to portfolio management and streamlining business processes, according to Microsoft. It's Microsoft Quantum director Julie Love's belief that future algorithms and quantum hardware might draw on Ally's financial datasets to help professionals make decisions.

For example, Monte Carlo, a popular method for analyzing risk in finance, requires many simulations to achieve high confidence. That's because Monte Carlo simulations account for uncertainty and randomness by constructing probability distributions over many possible outcomes as opposed to one.  In finance, Monte Carlo methods are applied to portfolio evaluation, planning, risk evaluation, and derivatives pricing. Quantum algorithms might improve these computations since quantum computers can run multiple scenarios simultaneously, and through quantum interference reduce the error in simulation.

“Technology has always played an important role in the financial sector, and it has been shown, time and time again, that those who lead with technology make the market … Even though large-scale quantum computers won't be available in the near term, their future availability is something for which businesses across the board need to prepare,” Love said in a press release. “With access to Azure Quantum, Ally is preparing a quantum-ready workforce that will be able to leverage scalable hardware as it becomes available.”

Private sector adoption

While work progresses toward viable quantum computing hardware, the private sector is increasingly investing in the technology. Last month, IBM announced it would install a quantum computer at the Cleveland Clinic, marking one of the first times the company has physically placed a quantum computer on-premises. And Microsoft previously partnered with global advisory Willis Towers Watson to experiment with ways quantum computing might assist the firm with its work in insurance, financial services, and investing.

“Current modelling techniques to quantify risk require a huge amount of computing power, using thousands of computers over many hours,”
Willis Towers Watson CEO John Haley said in a whitepaper. “Quantum computing offers us the chance to look at our clients' problems in a different way. By focusing on how we would model the problems on quantum computers when they become available at scale, we are able to work with Microsoft to redefine the problems and speed up our solutions on existing hardware.”

Microsoft launched Azure Quantum in private preview two year ago alongside a developer kit, compilers, and simulators. Partnerships with quantum hardware providers Honeywell, IonQ, or QCI enable developers in the program to use existing Microsoft products — like Visual Studio or the Quantum Development Kit — along with quantum computers.

Quantum venture funding dipped 12% in 2020 but quantum investments rose 46%, according to CB Insights. The total amount raised in the sector reached $365 million that year.