Quantum Computing in Finance: The Intesa Sanpaolo Experience

Quantum computing (QC) promises to revolutionize the computing domain with its ability to outperform classical computing in various applications. This article explores the potential of QC and its impact on the financial industry, among other domains. It focuses on the Quantum Competence Center at Intesa Sanpaolo, the largest bank in Italy. The Quantum Competence Center aims at leveraging quantum technologies to drive innovation and enhance banking and financial services. This article discusses the establishment of this corporate entity, its objectives, collaborations with academic institutions and quantum providers, workforce development initiatives, future perspectives, and the challenge of integrating QC into the bank's operational workflow.


I. INTRODUCTION
QUANTUMcomputi ng (QC) is foreseen to be the next big step in the evolution of the computing domain.This new computational paradigm is rooted in the laws of quantum mechanics,defining computing devices that are theoretically able to outperform any other classical computer in performing certain applications in finance [1], [2], [3], chemistry [4],biomechanics [5], machine learning [6], [7],networks [8], [9],and many other domains.
In a classical computer,the basic unit of information is the bit,which can take 0 or 1 binary values.Instead, in a quantum computer,we handle qubits.A qubit is a two-level quantum mechanical system,which can exist in a superposition of states,i.e.,a linear combination of the two basis states, |0 or |1 .A generic qubit state |Ψ is then defined as This generic state can also be identified as the vector |ψ in Figure 1.α and β coefficients are complex numbers that represent the probability amplitude of the two basis states.These probability amplitudes are complex numbers constrained by the equation Figure 1.Bloch sphere that visualizes the generic state of a qubit.
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This superposition characteristic enables quantum computers to perform calculations at an unprecedented speed and tackle complex problems that are practically impossible for classical computers to solve efficiently.
Among the interesting tasks within the financial domain,we find the following: r credit scoring; r fraud detection; r option pricing; r investment recommendation; r dynamic portfolio optimization.
The potential breakthroughs that QC can offer in these domains have ignited intense research and development efforts,making it a highly anticipated and promising frontier in the computing world.This article is part of a series of articles in this journal with insights on QC management topics [10], [11], [12] and about managing a quantum team in a large bank [13].

II. INTESA SANPAOLO
Intesa Sanpaolo (ISP) is the largest bank by total assets managed in Italy,and one of the largest financial institutions in Europe [14].
With its headquarters in Turin and Milan,Italy,it operates a vast network Figure 2.
of branches and subsidiaries both domestically and internationally.
ISP provides a wide range of banking and financial services to individuals, businesses,and institutional clients.These services include retail banking,private banking,corporate banking,investment banking,asset management,insurance,and wealth management.The bank serves millions of customers across Italy and has a significant presence in Central and Eastern Europe as well [15].
The bank is structured in several different departments working in synergy together covering all activities,which contribute to achieving the company mission, each with a high degree of autonomy.There are also specialized competence centers within the company,which are leading its progress in several domains.
The greatest part of these centers of excellence belongs to the Chief Data,AI,Innovation,and Technology Officer (CDAITO) Department.
CDAITO is committed to strengthening the relationship with business departments,making the development and adoption of technologies such as cloud computing and AI more effective, flexible,and integrated.
In particular,the Quantum Competence Center (QCC) has been established within the Group Technology Area inside CDAITO.

III. ISP QUANTUM COMPETENCE CENTER
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On the whole,the team provides five full-time equivalent (FTE) per year.
The QCC has five objectives (as in Figure 2),which are as follows:

IV. QCCS JOURNEY SO FAR
QCC is hosting and being part of many events and initiatives.These events offer invaluable networking and collaboration opportunities, allowing ISP to be early integrated into the quantum ecosystem, and to form partnerships with QC companies and researchers.
By engaging in such events,ISP can guide research in directions beneficial to the finance industry.Moreover,these events may potentially serve as a platform for talent acquisition,helping to identify and recruit experts in the field,and can spotlight promising startups and technologies worthy of investment.Furthermore,these events provide insights into the current state and future potential of QC,equipping employees with valuable skills that can be applied in-house.As a result of the QCC activity, some scholarly publications have appeared [2], [3], [21], [22].These PoCs are centered around areas where QC is projected to offer significant advantages over classical algorithms.Such areas can be credit risk analysis [2], [3],derivative pricing, risk modeling,portfolio optimization, natural language processing,or fraud detection [1].By focusing on high-impact areas,ISP aims to leverage quantum technologies to revolutionize key aspects of its operations.These PoCs are not only about testing the capabilities of QC but also about shaping ISPs future strategies.The learnings from these projects are guiding how ISP approaches the integration of quantum technologies into their broader operational framework, particularly in preparing for a future where QC becomes mainstream.The scholarly publications resulting from these PoCs contribute to the growing body of knowledge in QC applications in finance.They not only highlight ISPs pioneering work in this field but also provide valuable insights for the broader financial and academic communities interested in the practical applications of quantum technologies.
In September 2023,at IEEE Quantum Week,this collaboration presented a second peer-reviewed paper about quantum machine learning [22] and participated in the Workshop on Quantum in Consumer Technology.

V. CHALLENGES AND FUTURE PERSPECTIVES
ISP is committed to employing quantum algorithms and technology in every field that is relevant to financial services,from credit risk analysis to fraud detection and from portfolio optimization to financial recommendation systems.The interest also involves cybersecurity, both in the sense of developing a more robust communication channel for information exchange and in studying possible alternatives to public key encryption protocols,which are not necessarily quantum such as postquantum cryptography.
In the financial domain,there are many possible applications of quantum that could have a potential advantage over classical counterparts.QC allows the use of another type of math that can be exploited to solve problems that may not be classically intractable but in which there can still be some advantage to be gained.This advantage can be defined either in the speed domain,reaching the same outcome faster,or in the precision domain,reaching a finer solution granularity that was not previously possible.
QCC is building experience in this field while playing a role in the Italian and European development of the quantum ecosystem.
After knocking on doors to obtain projects and money,in 2023,QCC finally had its first internal client, the Innovation and Processes Department.The main challenge remains to be confirmed again as a strategic pillar of the next industrial plan,not starting from scratch when QC devices would be offered on the market as a regular service by many providers.
Given the number of activities being brought forward,the gained achievements so far,and the optimistic expectations for QC market evolution,it is expected that QCC will do nothing else than continue growing.

VI. FINAL REMARKS FOR NONBANKING MANAGERS
For managers outside the banking industry,the lessons from ISPs experience are manifold.
In the first place,it illustrates the adoption of a QC strategy inside a large corporation,and a path to building the internal QC workforce while interacting with partners, academia,and government.QC is a technology under development that is expected to have important implications for a wide number of sectors in the year to come.
The QCCs journey illustrates the importance of strategic partnerships with providers,governmental agencies,and academia,continuous learning,and being at the forefront of technological innovation.These principles are universally applicable, regardless of the industry.The QCCs approach to problem solving and innovation through emerging technologies can serve as a model for managers seeking to navigate their organizations through the complexities of the digital age.
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Finally, active participation in the QC field can establish ISP as a thought leader, r 2022 was a year full of announcements:Authorized licensed use limited to the terms of the applicable license agreement with IEEE.Restrictions apply.