Quantum Technologies Key Strategies and Opportunities for Financial Services Leaders 2025

L H L HMaturity level ScalabilityLevel of expertise requiredImplementation time and cost Risk levelIndicators Low to high – Low is desirable Low to high – high is desirableL H L H L H Early case studies (non-exhaustive) (continued) CASE STUDY 3 Exploring bond-hedging strategies with quantum-inspired solutions Santander explored the application of quantum-inspired (classical hardware) algorithms to optimize bond-hedging strategies. Managing large books requires substantial computational resources, which are expected to increase in volume in the medium term. Conventional methods, however, struggle to incorporate additional risk factors for real-time hedging, limiting their effectiveness in rapidly changing market environments. This often results in high execution costs and variance, necessitating more efficient solutions. To address this challenge, Santander Bank explored the application of quantum-inspired algorithms to optimize bond-hedging strategies. The hedge problem was executed on a quantum-inspired optimization platform, harnessing its ability to handle millions of decision variables efficiently. The results of the experiment indicated the solution’s faster execution time and ability to scale to a greater number of variables, reducing runtime significantly and enabling the optimization of larger bond portfolios. Santander Bank’s proof of concept (PoC) highlighted the competitive performance of quantum-inspired solutions. Further research, however, is needed to assess the cost- effectiveness of scaling these technologies for production environments. Testing other quantum-inspired solutions could provide additional insights into scalability and efficiency. This initiative demonstrates the feasibility of using quantum-inspired algorithms for bond hedging, achieving faster execution, improved scalability and enhanced risk management – showcasing its potential for integration into broader financial applications. Multi-phase integration action plan Phase 1 Foundation and exploration –Assess available technologies. –Identify and prioritize use cases. –Engage with experts. –Conduct initial training. –Initiate PoC. –Establish pilot project criteria. –Evaluate risks and challenges.Phase 2 Pilot and scaling –Initiate pilot projects that expand on PoC. –Develop integration strategies. –Implement training programmes. –Forge strategic partnership(s). –Monitor performance metrics. –Allocate resources effectively.Phase 3 Optimization and leadership –Continuously refine solutions. –Cultivate strategic innovation. –Engage stakeholders regularly.See the Appendices (A2) for other notable case studies. Quantum Technologies: Key Strategies and Opportunities for Financial Services Leaders 10