University-Industry Engagement Week

Stevens Institute fintech center addresses industry needs with quantum projects

By David Schwartz
Published: November 15th, 2022

The Stevens Institute of Technology’s Center for Research toward Advancing Financial Technologies (CRAFT), which launched in fall 2021 as the first-ever NSF-supported center devoted to fintech research, is building its ties to the industry with research focused on how quantum technology can help financial firms make better decisions.

Using its NSF funding, CRAFT recently recruited a Chief Research Officer and began funding its initial research projects earlier this year, and the school is betting that the nexus between quantum tech and fintech will build a bridge to industry.

“There are strong industry needs for faster computing, stronger security, and better scalability in big-data finance,” explains business professor Zhenyu Cui, an expert in financial engineering and the application of theoretical and algorithmic methods and models to financial applications.

“Quantum processes may help provide that.”

Cui’s research team will work on at least three means of leveraging quantum techniques to address financial prediction, risk management and other complex challenges. “Our method, at its core, is quantum computing,” he explains, “and in different applications we may combine and enhance the method using artificial intelligence (AI) and machine learning methods.”

For example, the team will develop new quantum-based modeling tools useful for risk analysis and asset valuation of very complex financial and insurance products. New quantum-driven algorithmic tools may prove more accurate than those currently used in industry, Cui says, because complex financial simulations require highly random numbers and random samples as they run — and truly random numbers can now be derived from quantum mechanical processes due to their inherent randomness.  

“Quantum random numbers are demonstrably more random than the ‘random’ numbers we currently generate and use in industry,” he notes. The extreme randomness generated by those processes, Cui explains, can power improved Monte Carlo simulations used for accurately valuing derivatives, Asian options prices, volatility options, or other financial products and markets. “Industry is very excited about the possibility of quantum random numbers,” he says.

“Quantum is a technology that is fundamentally different from computation as we know it with classical computers, that handles larger mathematical models, that solves specific problems more accurately or gives more insights in complex events — that might even tackle problems we did not think of yet,” says Nadine van Son, a senior consultant for financial services strategy, innovation and transformation at Capgemini, a global technology consultancy based in Paris.

Ongoing conversations and interactions with CRAFT and Stevens have been very constructive, notes van Son. “They bring a good approach to finding new research in fintech,” she adds, “and I really appreciate the researchers being open to new ideas and taking next steps. It is so valuable, Stevens and CRAFT building this bridge to industry, because we need the insights of researchers — and we have insights to bring to the research as well,” she adds. “This synchronization of academic research and industry knowledge is very important.”

Source: Stevens Institute of Technology

Posted under: University-Industry Engagement Week