BBVA Bank selects Fujitsu’s quantum-inspired Digital Annealer to explore customers’ investment portfolios

Munich, 04 Aug 2020
Read time 5min 50sec

News facts:

  • BBVA, one of Spain’s largest financial institutions, has undertaken a proof of concept with Fujitsu’s Digital Annealer to explore new ways of optimising investment portfolios.
  • Digital Annealer delivers more processing power than traditional computing, enabling it to rapidly evaluate possible combinations based on historical data.
  • Proof of concept is one of several BBVA projects to identify specific financial use cases where quantum technologies can deliver a greater advantage over traditional computing.

Fujitsu today announces that it is collaborating with BBVA, Spain’s second largest bank, on a proof of concept (POC) of its quantum-inspired optimisation solution Digital Annealer. The bank wants to determine whether the Digital Annealer could outperform traditional computing techniques in optimising asset portfolios, helping minimise risk while maximising returns, based on a decade’s worth of historical data.

Underlining its efforts to be at the forefront of innovation in the financial sector, BBVA[2] is conducting multiple studies to determine how quantum technologies could represent an advantage over traditional tools in different financial use cases. In support, BBVA launched a strategy that involves forging alliances, strengthening its internal capacity around this technology, evaluating different available tools, and developing proofs of concept in collaboration with research centres, traditional businesses and start-ups. In addition to portfolio optimisation, BBVA researchers are also exploring how the technology can be applied to areas such as the simulation of financial scenarios, currency arbitrage and credit scoring processes.

Regularly optimising portfolios is a typical challenge for financial institutions. But while creating projections for individual assets can be relatively easily, balancing an entire investment portfolio is incredibly complex. This is because there are countless possible combinations. For example, finding the optimal selection from just 20 stocks generates the equivalent of over one quintillion (10) permutations. Because of this complexity, portfolio optimisation has traditionally been a manual task, guided more frequently by guesswork than empirical data – simply because the convoluted calculations far exceed the capabilities of regular computers. However, Fujitsu’s Digital Annealer has been designed to process exactly this sort of complex combinatorial problem in just minutes.

BBVA’s Research and Patents team wanted to explore how Digital Annealer could be deployed to optimise an investment portfolio by evaluating different assets based on information including historical market prices to determine the level of investment in each. The bank also intends to use Fujitsu Digital Annealer to identify the best possible time to buy or sell assets, to maximise portfolio value.

The project is still in an exploratory phase, but early results point to a set of advantages for the Digital Annealer in comparison to tools currently used to resolve complex problems quickly, accurately and efficiently. Specifically, the POC between BBVA and Fujitsu has determined that better results can be obtained for large-scale calculations involving more than 100 assets or factors.

Carlos Cordero, Chief Technology Officer at Fujitsu in Spain, comments: “All industries have multiple areas that would benefit from optimisation; however, generally the sheer complexity of the problems means that guesswork or trial and error are the most common methods. While true quantum computing as a technology is still in the laboratory testing phase, Digital Annealer represents a bridge to this future technology, thanks to its ability to evaluate multiple different combinations extremely rapidly. Bringing this optimisation to the financial industry, for example, to identify the optimal portfolio and the ideal time to acquire or offload assets can make a huge difference to the returns it delivers.”

Carlos Kuchkovky, BBVA Global Head of Research and Patents, explained: “The quantum technologies ecosystem is evolving very quickly and we believe that the collaboration with various partners, public and private alike, is key in order to translate the benefits of the technology into tangible progress, for the banking sector and for society at large. Although this technology is still in an early stage of development, its potential to impact the sector is already a reality. Our research is helping us identify the areas where quantum computing could represent a greater competitive advantage, once the tools have sufficiently matured. At BBVA, we believe that quantum technology will be key to solving some of the major challenges facing society this decade. Addressing these challenges dovetails with BBVA’s strategic priorities, such as fostering the more efficient use of increasingly greater volumes of data for better decision-making as well as supporting the transition to a more sustainable future.”

Fujitsu has already deployed the Digital Annealer to solve multiple different problems for many industries, including identifying the optimal seam patterns for welding robots to follow on an automotive assembly line, determining the best routes for delivery trucks, finding the ideal parts placement and picking routes for distribution warehouses, maximising return on investment for utilities companies and, in the pharmaceutical sector, accelerating the discovery of new substances and development of new drugs.

Fujitsu’s Digital Annealer is inspired by the key characteristics of quantum computing – superposition, quantum tunnelling and entanglement – to evaluate an enormous number of potential options simultaneously for real-time optimisation. It leverages innovations in ultra-high-density circuit integration and high-performance processing to perform faster than today’s standard compute systems, bringing previously unsolvable problems within its reach.

[2]BBVA is a customer-centric global financial services group founded in 1857. The group has a strong leadership position in the Spanish market, is the largest financial institution in Mexico, it has leading franchises in South America and the Sunbelt Region of the United States. It is also the leading shareholder in Turkey’s Garanti BBVA. Its purpose is to bring the age of opportunities to everyone, based on our customers’ real needs: Provide the best solutions, helping them make the best financial decisions, through an easy and convenient experience. The institution rests in solid values: Customer comes first, we think big and we are one team. Its responsible banking model aspires to achieve a more inclusive and sustainable society.

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