CCB: play good first-hand chess and build a "shield and spear" of Quantum Finance

The 24th collective study meeting of the political bureau of the CPC central committee stressed: "we must fully understand the importance and urgency of promoting the development of quantum science and technology, strengthen the strategic planning and system layout of quantum science and technology, grasp the general trend, and play a good game of chess." "In March 2021, quantum information was included in the eight key core technologies of the 14th five-year plan, officially rising to the level of national strategy. the "fintech development plan (2022-2025)" recently released by the Chinese min bank also clearly proposes to explore the use of quantum technology to break through existing computing power constraints and algorithm bottlenecks, improve the concurrent processing capacity and intelligent computing efficiency of financial services, save energy consumption and equipment space, and gradually cultivate several valuable and landable financial application scenarios.

In response to the call of the state and the industry, China construction bank fulfills the responsibilities of large banks, actively lays out the application practice of quantum information technology, and explores the application of quantum information technology in the financial industry.

Quantum advantages and challenges

With the deepening of financial digital transformation, computing power will become a key constraint affecting the development of financial infrastructure in various countries. As the classical computer processor is close to the process limit, the "quantum tunneling effect" will lead to the failure of classical Moore's law, and it will be more and more difficult to improve the computing power of classical computer processors. To solve this problem, countries have gradually increased their investment in the research and application of quantum computing. Different from the classical computer, the computing power of quantum computers increases exponentially with the increase of the number of quantum bits. Through the use of the characteristics of quantum superposition and quantum entanglement, a quantum computer has considerable parallel processing ability. This is like coloring the workpieces. The classical computer processes them one by one through the pipeline, while the quantum computer immerses all workpieces in the dye at one time to accelerate the whole process.

While the quantum computing revolution has brought leaps and bounds to the digital world, it will also bring great challenges to the core security of the finance. Through short and other quantum algorithms, quantum computers can crack RSA, ECC, and other public-key cryptosystems widely used in the financial industry in a short time, which will bring a heavy blow to financial security. Since 2016, the National Institute of Standards and Technology (NIST) has launched three rounds of solicitation for anti-quantum encryption algorithms and called on the top five banks in the United States to make a post-quantum security migration plan. In 2021, the National Center of excellence for network security issued a white paper "preparing for post-Quantum Cryptography: exploring the challenges of adopting post-quantum cryptography algorithms", which listed in detail many challenges of post-quantum cryptography migration from public-key cryptography infrastructure, and suggested that anti-quantum security migration should be started as soon as possible.

At present, quantum computers have gradually moved from prototypes to the era of medium-scale noisy quantum computing (nisq), and the international competition is becoming increasingly fierce. In 2021, the 66 qubit processor "Zu Chongzhi 2.0" of the University of science and technology of China and the 127 qubit processor "Eagle" of IBM were released one after another, and the iteration speed was accelerating. According to the roadmap of the IBM quantum computer, 1 million quantum bits will be realized shortly. The emergence of quantum applications will be the general trend, and the competition between "shield" and "spear" in the quantum world will become increasingly fierce.

Quantum Finance Fin-Q

Many reports from institutions such as McKinsey and JPMorgan Chase pointed out that finance is one of the industries most likely to benefit from quantum computing. Quantum Finance (Financial quantum, referred to as fin-q) refers to the application of quantum technology in the financial industry.

According to the current development situation, the main application directions of fin-q include quantum security solutions, risk identification and measurement, quantum optimization problem solving, quantum machine learning, etc.

At present, international financial giants including JPMorgan Chase and Goldman Sachs Group continue to work in relevant directions to explore algorithms that can produce practical application value in the period of Esq.

Quantum Finance Practice of China Construction Bank

In response to the national call, fulfill the mission of the bank and explore a feasible path for large-scale application in the industry. In June 2020, China Construction Bank took the lead in establishing a quantum financial application laboratory in the domestic financial industry. Since its establishment more than a year ago, the laboratory has established a professional internal R & D team to carry out external cooperation, jointly carried out product and technology R & D with top quantum security and quantum computing teams at home and abroad, and jointly launched the quantum computing professional group of the Chinese society of computers with institutions such as the University of science and technology of China to jointly promote the ecological development of quantum information technology, Carried out a series of forward-looking research and innovative exploration.

China Construction Bank has been determined to build a "shield and spear" of Quantum Finance since its first day of involvement in quantum technology and has carried out a series of forward-looking research and innovative exploration.

"Shield": enhance the security of core financial assets by using anti-quantum encryption

The accelerated iteration of quantum computers not only brings asymmetric advantages to the industry but also brings great challenges to the core security of the finance. CCB actively assessed the quantum attack risk faced by the intra bank cryptosystem, established close cooperation with the domestic leading anti-quantum encryption team, continued to track the development trend of international anti-quantum technology, and took the lead in proposing the anti-quantum enhancement scheme of two locks in 2019. That is, under the condition of keeping the existing state secret system unchanged, the second anti-quantum lock encryption of financial data can effectively resist quantum computing attacks while minimizing the impact on the existing system.

At present, China Construction Bank has taken the lead in implementing this "two locks" anti-quantum solution in eight self-owned systems such as new generation file transmission and regulatory submission. And submitted a research report on anti-quantum to the people's Bank of China and relevant departments in 2020. Through the research on the financial application standard system of anti-quantum cryptography technology, China Construction Bank took the lead in drafting the anti-quantum security guide for the financial industry, and the project won the excellence award of the key research topic of financial standardization in 2020 by the National Financial Standards Technical Committee.

"Spear": build a Quantum Finance cloud platform and jointly build a practical algorithm for Quantum Finance

The algorithm research of quantum computing is inseparable from computing power and platform. Based on years of the financial system R & D capability and relying on the original base of the financial cloud, China Construction Bank has independently developed the quantum financial cloud platform, which has entered the internal testing stage. The platform has a variety of quantum algorithm research and development modes such as quantum circuit diagrams and online notebooks. The underlying computing power is compatible with the quantum simulator and quantum physical machine, which will provide strong support for the development of quantum technology in the domestic financial industry. Figure 1 is the interface diagram of the line visual development environment.

Figure 1: quantum circuit diagram development environment of China Construction Bank quantum financial cloud platform

In February 2021, China Construction Bank and strategic partner Benyuan quantum jointly released the first batch of domestic quantum financial algorithms, including "quantum option pricing algorithm" and "quantum VaR Estimation Algorithm", forming a Chinese scheme superior to international indicators and filling the gap in the field of domestic Quantum Finance. Recently, China Construction Bank has launched "quantum Bayesian network algorithm" and "quantum portfolio optimization algorithm", and completed more algorithm exploration by using a quantum financial cloud platform.

(1) Quantum Bayesian network

The Bayesian network makes forward or backward inference through a directed acyclic graph, which can be applied to financial liquidity risk analysis, enterprise bankruptcy analysis, and other scenarios. The quantum Bayesian network recently implemented by China Construction Bank makes full use of the characteristics of the basis vector exponential expansion of the composite quantum system to represent the Bayesian network on the quantum circuit, to save computing and storage resources. Figure 2 shows a simple Bayesian network and its quantum circuit implementation, and figure 3 shows the state space stored in the quantum circuit.

Figure 2: a simple Bayesian network and quantum circuit representation

Figure 3: Bayesian network state-space stored in the quantum circuit in Figure 2

(2) Quantum portfolio optimization algorithm

Quantum approximate optimization algorithm is an approximate algorithm that combines quantum computing and classical computing to solve binary combinatorial optimization problems. The quantum portfolio optimization algorithm independently developed by China Construction Bank recently combines the hot start algorithm with the portfolio model to further improve the accuracy of the algorithm. The simulation results on the historical data of the A-share market show that the portfolio scheme searched by the quantum portfolio optimization algorithm is better than the average result searched by the classical search method.

Future outlook

Quantum technology is a major disruptive technological innovation that impacts and reconstructs the traditional technology system and is expected to lead a new round of scientific and technological revolution and industrial change. The financial industry is one of the fields in which quantum computing is most likely to take the lead in the application. The flowering and fruit of quantum technology in the financial industry is worth looking forward to.

China Construction Bank will continue to uphold the mission and responsibilities of large state-owned banks, actively respond to the call of the national strategy for the layout of quantum technology, work with its counterparts in finance and science and technology, aim at the application problems of common key technologies in the industry, deepen research cooperation, actively promote the construction of quantum financial cloud platform, and jointly build an industrial ecology of quantum financial application, Contribute to the application and promotion of quantum information technology in the financial field.

Link:

Journal of financial electronization