How quantum computing will reshape security, strategy, and competition

By Adam Sandman 13 Jun 25 Reading time: 5 mins

Quantum computing is advancing at an unprecedented pace, and its implications for regulated sectors like financial services are immense. With major breakthroughs from technology leaders like Google (Willow chip), Microsoft (Majorana 1 chip), IBM (Qiskit software), and emerging quantum startups, we are fast approaching a new era of computation where quantum computers will outstrip classical systems in solving complex problems, including areas like data decryption (this is often called Q-Day or Quantum Day).

This evolution presents incredible opportunities, but also significant risks for financial institutions. Security vulnerabilities, competitive disadvantages, and regulatory challenges are major hurdles and pitfalls for firms that don’t begin preparing ahead of time. Financial organisations need to act now to make use of quantum’s potential impact (especially in areas like cybersecurity, algorithmic trading, and risk management) if they want to maintain their market standing and compliance readiness in the coming decade.

Breaking traditional security

One of the most pressing threats posed by quantum computing is its ability to break commonly used encryption standards. Currently, financial institutions rely heavily on RSA (Rivest-Shamir-Adleman) and ECC (Elliptic Curve Cryptography) to secure transactions, protect customer data, and maintain financial integrity. Quantum algorithms like Shor’s could, in principle, break these public key encryption methods. While this would be catastrophic regardless of whether it takes seconds or days, current estimates suggest that factoring RSA-2048, for example, would still require millions of physical qubits and hours to days of compute time – once fault-tolerant quantum machines become viable. Nonetheless, the trajectory of quantum hardware progress means that organisations cannot afford to wait.

Although quantum computing hasn’t reached the necessary milestones and scale to achieve this feat yet, I believe that practical quantum decryption capabilities are only 3-15 years away, depending on advances in quantum hardware and error correction. This means financial institutions need to begin transitioning toward post-quantum cryptography (PQC) now or risk massive data breaches once these systems become available. Failure to adapt will not only expose critical financial data but may also result in non-compliance with emerging regulatory mandates that focus on quantum security. Furthermore there is growing concern that bad actors may already be harvesting encrypted credentials in preparation for Q-Day.

Redefining finance competitive advantages

Security concerns aside, there are immense potential positives of this advancement as well. Quantum computing offers financial institutions the ability to innovate at unprecedented rates. Quantum-powered simulations will inevitably improve risk modelling by a significant margin, facilitating the analysis of thousands of economic scenarios at the same time. This allows for more precise stress testing, better portfolio optimisation, and a deeper understanding of systemic risks.

Traditional derivative pricing models (like the Black-Scholes model) involve intensive computational simulations. Quantum computing can significantly accelerate Monte Carlo simulations used in derivative pricing, allowing for near-instantaneous option valuation and better hedging strategies.

Fraud detection will also benefit from quantum computing’s ability to analyse vast datasets in real-time. Machine learning algorithms, enhanced by quantum computing, can detect anomalies in financial transactions more accurately than traditional AI models, reducing fraud rates and improving overall transaction security.

Quantum simulations can model complex macroeconomic scenarios more accurately, allowing central banks, hedge funds, and institutional investors to better prepare for economic downturns, inflationary trends, and geopolitical risks.

All of these factors might contribute to competitive advantages in the coming years. Financial institutions that proactively adopt quantum capabilities will not only safeguard their operations but also potentially open new opportunities by leveraging quantum for competitive differentiation.

Roadmap to digital resilience in a post-quantum world

To navigate the quantum era effectively and successfully, financial institutions should adopt a strategic approach to resilience and innovation. The following steps outline essential actions for future-proofing financial operations.

• Adopting post-quantum cryptography: Transition to quantum-resistant cryptographic standards endorsed by NIST (National Institute of Standards and Technology) and other regulatory bodies. It’s important to incorporate hybrid cryptographic approaches that combine both classical and quantum-safe encryption for a seamless transition. Make sure to conduct risk assessments to identify and protect critical data assets against quantum threats.
• Regulatory readiness: Monitor global regulatory developments around quantum security, including Europe’s anticipated quantum risk compliance frameworks. You should collaborate with regulatory agencies to verify alignment on evolving security mandates and develop internal compliance policies that integrate quantum security into existing cybersecurity governance models.
• Investing in quantum-safe infrastructure: Upgrade your legacy systems to be compatible with quantum-resistant security measures. Consider partnering with quantum security firms to integrate early-stage quantum defenses and start investing in secure communication channels based on quantum key distribution (QKD), where applicable, while recognising its deployment challenges to mitigate future cybersecurity risks.
• Strategic quantum adoption: Explore quantum-powered risk analysis and algorithmic trading for competitive advantage. Investing in quantum research initiatives will help you stay ahead of technological disruptions. Training internal teams in quantum literacy will also foster a workforce that understands quantum’s financial applications and can make better use of it.

Act now or fall behind

The quantum revolution is not a distant possibility, it is an imminent reality. Financial institutions that delay preparations are at risk of not only security vulnerabilities but also lost market share to more agile, quantum-ready competitors. To navigate this transformational shift, financial leaders need to prioritise quantum security strategies and testing, regulatory awareness, and forward-thinking development and innovation today. The future of finance will be shaped by those who act sooner rather than later to harness quantum computing instead of being disrupted by it.

Adam Sandman / Guest writer

Adam Sandman is founder and CEO of Inflectra, a test management, quality assurance, and cybersecurity business helping enterprises implement rigorous testing frameworks for AI-driven development and algorithm integrity.