Quantum technology has the potential to revolutionize various industries, particularly wealth management.
While quantum computing might seem like science fiction, it is quickly transitioning from theoretical research to commercial application, with tech giants like Google and IBM leading the charge.
Unlike conventional computing, which uses bits in a deterministic on-or-off state, quantum computing employs qubits that can exist in multiple states simultaneously. This shift allows for unprecedented computational power, opening doors to complex problem-solving in portfolio optimization, risk management and complex asset pricing.
It's easy to compare the transformative impact of quantum computing to the recent explosion of generative AI; when quantum arrives, it will be a technological leap of similar magnitude.
I was lucky enough to sit down with AdvisorEngine's Chief Technology Officer, Raj Madan, to delve into quantum computing, distinguishing it from traditional binary systems. Madan shares the challenges and implications for cybersecurity, as quantum's capabilities could render current encryption methods obsolete, necessitating new strategies to secure data. Click on the video to watch the entire interview.
Transcript:
Suleman Din: Raj, thank you for joining me today. I’m interested in talking to you a little bit about something that you presented recently at T3 about the future of technology, particularly one sliver of it, which is quantum computing. To me, it sounds like something straight out of Star Trek, but it's apparently not that far off.
So, tell me a little about what quantum computing is and why we should be paying attention to it, especially in Wealth Management.
Raj Madan: In the quantum computing space, and as far as the time horizon, I would say we're looking at three to four years out, which sounds like a long time, but we know how time flies, right?
Din: That's nothing. Four years from now? Wow.
Madan: Quite honestly, it has already moved from the labs of the universities into the commercialized space and the research in that space. So, Google is obviously a big proponent, and IBM is a big proponent. There's a lot of research being done. So, when it comes, it will be just as drastic as the generative AI exposure that happened last year.
Din: That's the same path that went from the University of Toronto, then to open AI, and then suddenly blew up on the scene with ChatGPT, obviously being the first of many generative AIs now that we've seen since.
Madan: The chip industry is definitely ripe for innovation. It's been doing a lot in the graphical processing unit space. Now, they're going to take the next leap when it comes to quantum computing.
Din: So, will we have a quantum computer in our home? Can you talk a little bit about that? What are we going to see first?
Madan: There are definitely going to be issues about having a quantum computer at home at this point, but you never know what holds in the future.
But as far as what is quantum computing, let's just talk about that first. Quantum computing is essentially computing at the subatomic level. When I say subatomic, I'm talking about, like, electrons or photons of an atom.
So this is a very, very small low-level, right? And as you said, it is very science fiction-like. And there are certain things they always talk about, we're not going to get into it in too much detail, but it's like superposition, interference, and entanglement, which I love the most. I think it's the most fun part of the whole quantum computing space.
What's going to happen is those three things I just mentioned they represent certain barriers to doing something at home right now, and essentially barriers that the industry is trying to tackle.
For instance, to deal with interference and decrease noise, they bring the system down to an absolute zero, zero Kelvin, or minus 450 degrees Fahrenheit. And that kind of atmospheric setup will be very expensive until we know how to do this better.
Din: Just to back up a second here. So we're talking about, as I understand it, the nature of how a computer understands commands, right? So you're moving from a system, a binary system, right?
Madan: That is right.
Din: Ones and zeros.
Madan: That is right.
Din: To what you were talking about, electrons, which are not simply ones and zeros, but a range.
Madan: That is right. So, instead of a binary bit, which is one and zero, which we did conveniently, it always helped us because we can understand things being turned on and off.
And we translate that to transistors, which eventually became the CPUs of today and the GPUs of today. Now, instead of a bit, you will have a qubit. And that's precisely what you just mentioned, which is something that can be a zero, it could be a one, or it could be a spectrum.
I mean, a probability of zero, a probability of one. What is interesting about this stuff is that when we think binary, binary is very deterministic. But nature, especially quantum mechanics, is not.
There's the whole chaos aspect within quantum mechanics. The probability of certain things is not as straightforward. So, using that to our benefit is, believe it or not, a way to go.
Din: It's amazing that they shifted from that determinative model. How did they even decide that we can package this in computing power?
Madan: Believe it or not, it goes back to Albert Einstein and his theories and what he spoke about. He called it, and I'm going to butcher this: the spooky aspect.
Din: The spooky science.
Madan: Yes, spooky science. And it goes back to a lot of the stuff that they've been writing about for so long, which has been more theoretical, and now they're saying, well, let's take that and bring it into practice.
What's the next step in our journey here? And now we just have the technology to go there. Like in generative AI, you had an innovation on the software side. You have this thing called Transformers, and then someone built the infrastructure to enable it. So it's this confluence of events that have occurred and now we have these amazing solutions.
So in the case of theory, theory has been around for quite some time. Now we need the technology to sort of manage the theory to enable even the atmospheric requirements that we have. And now we're talking about the next steps.
Din: So I guess we won't see it in the same way that Generative AI came out of the scene right away and everyone just started using it to like dictate emails and what have you. Just because of these enormous requirements, I guess it gets rolled out a little differently. Where will we see it first?
Madan: One of the places you're definitely going to see at first is those who invest a lot in the space.
All the cloud-based entities like Google, Amazon, Microsoft, they actually, if you go to their sites, you can look at their options for working with quantum computing already.
I think they're very, you know, very thin if you will. But at the end of the day, all the cloud providers are aware of this revelation that will occur, and they are preparing. And there are some security concerns here, too.
I don't know if you want to get into that, but there are things that we have to prepare for when this does occur.
Din: Well, I'm assuming it's like what you see in these movies about a mass [cyber] attack – with these sophisticated AI-like machines just crashing through systems. We're talking about some sort of advanced level of computing that makes current cybersecurity obsolete.
Madan: That is right. So, currently, the keys that we use for encryption are essentially 256 bits, right? We use that number and that size because we feel like it's safe and it's hard to crack. And, of course, it provides a good user experience, so it's not too much of a load on the system.
But when we go down this path of quantum computing, then you're going to have keys that are much more sophisticated, first of all. So you are going to have safer situations. But the problem becomes now you suddenly have a quantum computer that can do so much more as far as trying to hack into that key and essentially decrypt it. When that does happen and the first entity does have a very successful quantum computer, all the current keys that we have out there, and I'm talking about everybody, everybody, all the keys are going to become defined.
Din: The analogy that I'm going to try and draw here – I'm on TikTok a lot according to my wife – people have started throwing these historic videos up. I saw one video of World War II. So there were all these American fighter pilots flying around. And then, all of a sudden, it was the first time they ever saw a jet-powered German fighter they had to shoot at, right?
Madan: That's a good analogy.
Din: So on the radio, the pilot was like, what the hell is that? Because the thing blew past them. We have existing computers, but we're all sort of in those propeller kinds of powered airplanes flying at a certain speed, and then suddenly a jet craft coming out of nowhere, which is now the quantum computer, comes out and then blows our minds in terms of what we understand computing to be.
Madan: It'll be interesting to see if that actually happens. It's going to be that drastic of a change. One of the things we kind of mentioned is interference and when you have that sort of noise in the system, one thing they've thought about to decrease the noise is using classical computing to help you to decrease the noise.
So, it may not be as drastic as that, but as we know, these things do have massive leaps when they occur and are shocking to a certain extent. It's suddenly like, oh, it's here.
I think that analogy is pretty good because once you have that stable quantum computing solution that is robust, you will have something out of this world.
Din: Well, I've talked to many people about how we've been here 20 years at T3; what will the next 20 years be? Will it all be quantum computers, then?
Madan: I mentioned this before. About 20 years ago, did we ever think that we'd have a supercomputer in the palm of our hands? That's what we were all basically carrying around is a supercomputer.
So, will we have quantum computers at home in 20 years? Hard to say.
Din: From a business side, say I'm in a wealth management firm, and I'm thinking about AI and quantum computing. How do I prepare for these things? Or how do I position myself as a business to take advantage of these things, hopefully giving me a competitive advantage as we go into the future?
Madan: Yeah, so obviously, investments are very important here. If you do have an on-premise solution, meaning you roll your own in your own data center, you will have to prepare somehow, and that will be a difficult task.
But just as far as application-wise goes, getting off of the legacy platforms, like we've [AdvisorEngine] spent a good amount of time last year and the year before to transitions off our legacy platform on the CRM side, and now have everybody in the cloud.
I'm more comfortable in that space because I know all these cloud providers are looking into that and researching it, and hopefully will be more prepared than the rest of us when it comes to this stuff.
I think that being in the cloud in this example is a good place to be; it's a very safe place. One of the benefits you get from being fully cloud-based is that when technology does change, they adopt it very quickly and provide us with the tools we need to leverage that change. So there's an advantage to that in my mind.
Din: The companies investing in quantum computing right now, do you see a business model where they would make quantum computing available through the cloud, so you would basically access it without having to set up a quantum computer on your own?
Madan: 100 percent. They're already doing that. So if you go to their sites, they'll say, hey, you want to try some and do some proof of concepts and so forth. So they're already in that process; they're down that road.
Din: So, at least for the first couple of years, it'll be like that, right? Firms will have to go to the big firms that can afford these things [quatum computers] and use them there. Do you see the institutions in our space trying to build that as well, or will they rely on Amazon the way that they use it for AWS?
Madan: Yeah, well, you know, this is innovation at its best. And we know capitalism drives a lot of this stuff. So it's like at the end of the day if they can, they will make it. And if they can sell it, they will most definitely make it.
So yes, maybe it's the large industrial entities that have their on-premise data centers. Maybe there will be an entity out there that can help them ensure they don't get squashed by this cycle.
I assume that things will work out better, but there will be a time when there will be a bit of a gap. And my concern is that gap.
Din: Do you see the firms that have access to that, having a real competitive advantage? I have the ability to tap into quantum computing, so my portfolio management is going to be far better than yours.
Madan: Absolutely, so a lot of the optimization space, portfolio optimization, risk management, complex asset pricing, or even if you're, like I mentioned if you're doing financial planning and you're doing, let's say, Monte Carlo and you want to run 10,000 scenarios in the background, you could do that pretty quickly – it would be instantaneous. Maybe real-time is the word I should use. So it's very different than what we do now, which is you run it, you wait a little while, you get back a result, and you'll have to do it in real-time.
So there will be a definite advantage there. Taking advantage, I'm still kind of questioning how we will take advantage of it because, along with all infrastructure change, it is an application change, so we have to be cognizant of the fact that application changes have to occur.
Din: It sounds like quantum computing will be bigger than AI to some degree.
Madan: And it'll help AI. It'll pair with AI. It'll supercharge AI. So it's like I said, it's going to revolutionize the times. I mean, it is an exciting time to live; it really is. When you think about quantum computing and what goes on, it's modeled like Mother Nature, right? And at the quantum level, right? So you're talking about how atoms work with each other and their connections, right? Right now, we have trouble modeling things sometimes because of complexity.
So now you have a computer that is no longer based on a legacy concept of a zero and a one because it was easy to turn a switch on and off to something that matches more of mother nature. And now you have that, you know, you can model the world. It's going to be very interesting to see what happens.
Din: Yeah, definitely. Hopefully, we'll be around to see it, but we don't have computers that get quantum and realize that they can do stuff better than us. All jokes aside, always a pleasure to talk to you about this stuff, Raj. This is super fascinating. Thank you so much for talking about these latest and greatest developments in the tech space.
Madan: My pleasure, thank you.