Quantum computing is poised to reshape science, pharmaceuticals, defense, energy, and finance. HSBC Holdings (HSBC) has now taken a step into this field by testing quantum tools for bond trading with International Business Machines (IBM). The bank reported that the trial achieved up to a 34% improvement in predicting whether a trade would be filled at the quoted price compared to standard methods used today.
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Meanwhile, HSBC shares have dropped 0.44% in yesterday’s trading, closing at $69.89.
The trial analyzed more than one million requests for quotes on over five thousand European corporate bonds between September 2023 and October 2024. HSBC used a hybrid system that combined quantum and classical computing, which gave the model an advantage over common techniques. However, the study also cautioned that the results are tied to this specific dataset and may not extend to other markets.
Philip Intallura, HSBC Group Head of Quantum Technologies, called the project the most tangible example yet of near-term value from quantum hardware in finance. He added that the bank views this as a sign that a new era of computing is close at hand, rather than something distant.
Why It Matters
For financial firms, even small gains in prediction accuracy can translate into significant advantages across billions of trades. HSBC’s 34% boost indicates that quantum tools could enhance how banks manage risk and improve efficiency in bond markets. Although the study was based on historic data rather than live trades, the outcome points to early steps toward practical use.
Meanwhile, IBM is competing with Alphabet (GOOG) (GOOGL) to build large-scale quantum machines by the end of the decade. At the same time, experts warn that more powerful quantum systems could threaten current encryption methods, which are central to banking security.
Jay Gambetta, Vice President of IBM Quantum, explained that quantum machines can process information in ways that classical systems cannot. For HSBC, the trial provides an early view of how quantum computing may deliver practical benefits and offer banks a competitive edge once the technology matures.
Is HSBC a Good Stock to Buy?
On Wall Street, HSBC receives limited coverage and currently holds a Moderate Buy rating from a single analyst. The average HSBC stock price target is $74, implying a 5.88% upside from the current price.
