D-Wave and CaixaBank collaborate on quantum applications for the financial sector
VALENCIA, Spain and BURNABY, British Columbia, Canada, March 3, 2022 — CaixaBank, Spain’s leading financial group, and D-Wave Systems Inc., a global leader in quantum computing systems, software and services, and the only provider to build both annealed and gate model quantum computers, today announced the business results of two financial quantum hybrid computing applications important for investment portfolio optimization and investment hedge calculation . Quantum hybrid applications have significantly reduced the computation time to solve complex financial problems, improving investment portfolio optimization, increasing the internal rate of return (IRR) of the bond portfolio and minimizing the capital required for hedging transactions, thanks to their collaboration.
Quantum in investment portfolio hedging and bond portfolio optimization
CaixaBank’s life insurance and pension company, VidaCaixa, benefited from the D-Wave jump™ quantum cloud service and hybrid quantum solvers – which combine the strengths of classical and quantum computing – to create a quantum computing application as part of their investment portfolio selection and allocation, and in the as part of their portfolio hedging efforts. With this project, CaixaBank Group becomes the first known financial services company in the world to apply quantum computing to cover investments in the insurance sector. The group is evaluating the regular production of the application not only in VidaCaixa but in other areas of the organization, in the coming months.
The CaixaBank Group team used D-Wave’s quantum hybrid solver services to code a faster algorithm, which drastically reduces the computation time needed to reach an optimal solution to improve the portfolio coverage of investment. What would normally take the bank several hours of computing time has been reduced to minutes thanks to quantum computing technology, a reduction of up to 90% in computing time compared to the traditional solution. This reduction in computation time facilitates increased modeling complexity, allowing for a more dynamic model that is better suited to real-time markets; optimizes the capital invested while maintaining a constant level of risk; and improves the hedging decision-making process.
With respect to the selection and allocation of investment portfolios, the algorithm quickly generates portfolios that can be optimized against a wider variety of constraints in a reduced time frame. The result was a successful application that optimizes the IRR by 10% in a chosen bond portfolio.
“We have always been an innovation-driven organization, and early on we recognized that investing in quantum computing could help us deliver cutting-edge products and services more efficiently to deliver the best customer experience. This has been the case with this proof of concept, which confirms that the bank is the first in Spain, and one of the first in the world, to integrate quantum computing into its daily activity”, says Gonzalo Gortazar, CEO of CaixaBank . While attending a commissioning ceremony in Jülich, Germany where D-Wave announced the first Leap quantum cloud-based system outside of North America at the Forschungszentrum Jülich Supercomputing Center, Gortazar confirmed CaixaBank’s commitment to continue exploring the potential of quantum computing in the financial services sector: “We are very grateful to see this industry grow and mature, and we look forward to increasing our investments and our efforts in the quantum field, which will surely transform our industry. We are very keen to work with D-Wave in this process.
“Our focus has always been the development and delivery of quantum computing for practical applications and commercial value,” said Alan Baratz, CEO of D-Wave. “The finance industry is currently undergoing a massive transformation, which is why the industry is poised to reap great business benefits from investments in quantum computing. CaixaBank has a clear vision for implementing quantum applications ready for market to drive efficiency, customer value and scale.We look forward to continuing our collaboration with them as they expand their offerings and identify additional use cases for quantum computing. »
CaixaBank’s quantum journey
In 2019, CaixaBank set up a team of experts with computer technicians, mathematicians and risk analysts dedicated to quantum innovation in a multidisciplinary way, in order to explore the potential of quantum technology to strengthen the bank’s different capabilities in various areas, such as risk assessment and extreme risk simulators, fraud detection with artificial intelligence and machine learning, safe quantum cryptography, selection and allocation wallets and optimizing data mining.
One of the first projects was the implementation of a quantum algorithm capable of evaluating the financial risk of two portfolios created specifically for the project from real data, one composed of mortgages and the other of goods of treasure.
In 2020, CaixaBank developed the first machine learning algorithm to rank risk in the Spanish banking sector leveraging quantum computing. In this case, CaixaBank combined quantum computing and conventional computing in different phases of the calculation process – to classify credit risk profiles. To do this, CaixaBank used a public data set corresponding to 1,000 artificial users, with a profile similar to existing customers, but with information configured specifically for the test.
In this project, CaixaBank used the Leap quantum cloud service to access D-Wave’s quantum hybrid solver service that integrates the Advantage™ quantum computer. The cloud and real-time access service enables businesses like banking and countless other industries to solve complex and important enterprise-scale problems. To date, D-Wave customers have created hundreds of early applications using their systems, including protein folding, financial modeling, planning, logistics, manufacturing optimization,… machine learning, route optimization, etc. On the strength of these results, CaixaBank is working on the production of hybrid quantum applications.
CaixaBank is the leading financial group in Spain. After its merger with Bankia, the bank has assets of 685.74 billion euros, making it the largest bank in Spain and one of the leading banks in Europe. CaixaBank is also very present in Portugal, where it controls 100% of BPI.
The Group, chaired by José Ignacio Goirigolzarri and managed by Gonzalo Gortázar, has approximately 21 million customers and the largest commercial network in Spain and Portugal, and is a leader in digital banking with 73.1% digital customers.
About D-Wave Systems Inc.
D-Wave is a leader in the development and delivery of quantum computing systems, software and services and is the world’s first commercial provider of quantum computers and the only company to develop both annealing quantum computers and gate model quantum computers. Our mission is to unleash the power of quantum computing for business and society today. We do this by delivering customer value with practical quantum applications for problems as diverse as logistics, artificial intelligence, materials science, drug discovery, planning, cybersecurity, fault detection and financial modelling. D-Wave’s systems are used by some of the most advanced organizations in the world, including NEC Corporation, Volkswagen, DENSO, Lockheed Martin, University of Southern California, Forschungszentrum Jülich and Los Alamos National Laboratory. With headquarters near Vancouver, Canada, D-Wave’s US operations are based in Palo Alto, California. With its headquarters and center of excellence in quantum engineering near Vancouver, Canada, D-Wave’s US operations are based in Palo Alto, California. D-Wave has a blue-chip investor base that includes PSP Investments, Goldman Sachs, BDC Capital, NEC Corp., Aegis Group Partners and In-Q-Tel.
D-Wave announced in February that it had entered into a definitive merger agreement with DPCM Capital, Inc. (“DPCM Capital”) (NYSE: XPOA), a publicly traded special purpose acquisition company. Upon closing of the transaction, shares of D-Wave Quantum Inc., a newly formed parent company of D-Wave and DPCM Capital, are expected to trade on the NYSE under the symbol “QBTS”. To learn more, visit www.dwavesys.com/investors.