Taking a quantum leap into the future of financial services

The race for quantum supremacy may grab headlines, but it feels removed from our daily lives. Quantum computing – the ability to solve incredibly complex problems exponentially faster than today’s supercomputers can – sounds great for answering larger-than-life questions, such as planning for space missions or designing antibodies to speed drug discoveries. But its immediate impact for everyday people is harder to see.

Steve Flinter has some views on this. As head of Mastercard's R&D Artificial Intelligence and Machine Learning team, he and his colleagues explore ways that quantum computing could push payment networks into new frontiers. As part of a $13 million research initiative based in Ireland, Mastercard is working with IBM, the Tyndall National Institute, University College Dublin and others to accelerate quantum computing research in financial services.

Such opportunities are theoretical, but there’s nothing theoretical about the interest – and the money – pouring into research labs around the world in the hope that real-world applications will result in significant cost savings and higher revenues, as quantum computing could reshape card loyalty benefits, data security and payment networks. Those sales increases could start at $2 billion to $5 billion by 2024, then grow to more than $450 billion annually in coming decades, according to a 2019 report by Boston Consulting Group.

For starters, Flinter’s team is experimenting with quantum computing in an effort to customize consumer rewards programs at an individual level. If successful, the idea would transform the business of consumer loyalty by improving efficiency, choice and customer satisfaction, delivered at a far lower cost to companies.

With quantum computing, the team has the potential to explore many more options in order to find the best one. For example, with a marketing campaign that involves offers for cardholders, classical computers can’t quickly determine which combinations of rewards would be best suited to which cardholders. Finding the optimal offer is not just like trying to find a needle in a haystack – it’s like trying to find a needle in a billion haystacks.

“For these kinds of prediction models, quantum computing could be a game changer,” Flinter says. “This helps with finding patterns, performing classifications, and ultimately making predictions that are not possible today because of the challenges of complex data structures.”

Additionally, quantum computing could be used to move card transactions more efficiently through a payment network. Every day, millions of cardholders around the world make payments online and in person chip cards or touch-free technology or even magnetic strips. For every combination of user, location and transaction type per bank, there are multiple paths a payment could travel.

“The challenge is that payments may not be following the best or most appropriate optimal paths in terms of efficiency,” Flinter says, explaining that quantum computing could calculate all the combinations accurately enough to select the most optimal route.

New opportunities, but also new risks

Emerging technologies create new opportunities, but can also bring new risks. Quantum cryptography could harness its immense computing power to both encrypt and decrypt data. Much of the world’s electronically encrypted data – including the digital tokens associated with consumer card accounts – are protected using mathematical equations with a vast number of possible solutions. These encryption models are too complicated for classical computers to crack in a practical length of time.

“But imagine if there’s a quantum computer that can crack the code in a few hours,” explains Sadiq Mohammed, a vice president for product development in Mastercard's Cyber & Intelligence business. “The threat is that if this technology gets in the hands of the wrong people, they can potentially break the cryptography.”

It’s a scenario for which the cyber teams are already preparing. For one thing, the underlying encryption calculations can be made quantum-resistant – meaning, sufficiently more complex. Even though the capability of quantum-enabled hacking isn’t here yet, teams are continually taking inventory of areas that could be vulnerable to any kind of attack, not just quantum computing.

With greater adoption and demand for contactless payments globally, the Cyber & Intelligence team recently released new contactless specifications called Enhanced Contactless, or Ecos. In the coming years, these specifications should make contactless payments quantum-resistant with a simple software upgrade – no new hardware of terminals required – and without any changes to the tap-and-go experience for shoppers.

And, Mohammed points out, Mastercard in the future could use quantum computers to protect against the very same threats it may engender, identifying and shutting down quantum-based attacks and fraud as quickly as they arrive – fighting fire with fire.

Precisely when and how quantum computing will become part of everyday life remains to be seen. As Flinter points out, 20 years ago, no one predicted smartphones and 4G networks would lead to rideshare apps such as Uber or Lyft. “There will be things that we cannot contemplate now that will be available to us in the future,” he says.  

And that’s precisely what quantum computing may help us discover.