The promising era of quantum computing in lending

  • AI and RPA, in conjunction with quantum computing, would enable loan applications to be processed quickly (as they facilitate a smooth loan-origination process), while the inclusion of pre-programmed rules could enable automated approval of mortgages and different loan facilities. Customised products could also be recommended (in line with the chart above), minimising customer dissatisfaction. Standard Chartered Bank, for example, is exploring several use cases (such as risk management) while understanding the importance of developing new financial products with assistance from this technology.
  • Credit scoring is a major function of the credit underwriting process, and in the current pandemic scenario, keeping track of changes to credit scoring has become vital. Quantum computing can facilitate this, as it enables a multitude of inputs to be incorporated into a risk-rating model, providing a more insightful risk assessment of client portfolios. BBVA has been working with Accenture and startups such as Multiverse to optimise credit scoring processes, translating into greater accuracy and benefits (as outlined in the chart above). CaixaBank is testing the technology in different banking scenarios while using a hybrid approach with classical computing for risk classification.
  • A Fenergo survey in 2019 estimated that banks and financial institutions lose USD10bn- 40bn in revenue a year owing to fraud-related activity and inefficient data management procedures. The data-modelling capacity of quantum computers would enable finding complex patterns within large datasets, facilitating making proactive predictions pertaining to fraud management (as the chart above shows). Moreover, banks could utilise distributed ledger technologies with strong quantum computing capabilities to enable a more secure and faster KYC process. ABN Amro Bank, for example, is exploring the use of quantum computing in securing online banking, and HSBC has joined the European Next Applications of Quantum Computing (NEASQC) project with the aim of identifying use cases, including security.

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Acuity Knowledge Partners

Acuity Knowledge Partners

We write about financial industry trends, the impact of regulatory changes and opinions on industry inflection points. https://www.acuitykp.com/