Inside Banking’s Quantum Future with Lloyd’s Banking Clare Schramm Fergus

In this final episode of series one of Time to Talk Quantum (TTQ), Firgun Ventures co-founder Dr Kris Naudts speaks with Clare Schramm Fergus, Managing Director of Transaction Banking Technology Platforms at Lloyds Banking Group, about how the financial sector is preparing for the quantum era.

Clare discusses the risks and opportunities quantum computing presents to global finance, from the threat it poses to today’s encryption systems to what a large-scale quantum attack could mean for financial markets. The discussion covers quantum readiness and the role of standards such as NIST in shaping preparation, as well as Lloyds’ collaboration with partners such as IBM and Google on quantum experiments and simulations.

Together they explore how the financial sector is preparing, including broader discussion of how institutions such as JPMorgan and HSBC are engaging with quantum developments. They also discuss the wider implications for financial systems and society, from Bitcoin and dormant crypto wallets to digital public infrastructure, alongside the UK Government’s role in quantum regulation.

About the guest: 

Clare Schramm Fergus is Managing Director of Transaction Banking Technology Platforms at Lloyds Banking Group. Clare drives the modernisation of Lloyds’ core technology platforms to enhance business and transaction banking services, future‑proofing the bank for emerging technologies from AI to quantum. Over her 20-year career, she has led and grown global teams and delivered award-winning platforms at BT, Google, and IBM. 

Follow Clare on LinkedIn Clare Schramm Fergus | LinkedIn 

In the news: Lloyds Bank uses quantum computing to detect money mules 

This podcast is brought to you by Firgun Ventures.

Follow Dr Kris Naudts on LinkedIn

Firgun Ventures LinkedIn

Firgun Ventures Website

Content advisory: Time to Talk Quantum explores the intersections between quantum technology and AI, health, finance, defence and art. Some discussions may cover sensitive or technical subjects related to cybersecurity, global security, geopolitics or emerging technologies. The podcast is for informational purposes only and does not constitute investment, scientific, or medical advice. 

Transcript

SPEAKER_00 0:05

Welcome to Time to Talk Quantum. I'm Dr. Chris Knotz, neuroscientist and psychiatrist, founder of Culture Trip and co-founder of Fearground Ventures. Today I'm delighted to be joined by Claire Schram Fergus, managing director of transaction banking technology platforms at Lloyd's Banking Group. Claire drives the modernization of Lloyd's core technology platforms to enhance business and transaction banking services, future-proofing the bank for emerging technologies from AI to quantum. Over her 20-year career, she has led and grown global teams and delivered award-winning platforms at BT, Google, and IBM. It's time to talk quantum. Evident Insights came out with a report recently that 80% of the world's 50 top banks are now engaging in quantum. Now they engage around the opportunity, but it seems even more around the threat, the sense of threat. Could you talk a bit to us about what that threat indeed is for the banking world?

SPEAKER_01 0:57

Sure. I mean, you know, the whole promise of quantum and financial systems is about improving efficiency of financial transactions, improving our price and risk modeling, shortening cycle time, more transparent and secure financial systems. But I think what's scary is the potential that, you know, banks don't necessarily need to be intermediaries in these kind of systems in the future, right? And it really drastically changes the structure of our current financial systems. And that's really the existential threat, right? Reshaping these financial structures that have existed for, you know, years and have built and evolved with modern times. Um, you know, quantum, you know, relies on, you know, relies on quantum to encrypt itself, right? You know, we don't rely on authorities. There's digital tracing, there's more traceability, and there's the whole promise of making global trade faster and easier. But there's very much the I think the disruption to the traditional processes, systems, controls, and most, I think, crucially, controls that we know. And that's really, really the threat. And I think for us, you know, we have to lean into the opportunity and also be equally as cognizant of the threats and defending against that, of course. Yeah.

SPEAKER_00 2:11

Yeah, the fear of breaking encryption, of course, is there. I mean, how how near are we? And and and and are we are we sizing up that threat uh in an accurate way?

SPEAKER_01 2:20

Gosh, well, I don't know if you were paying attention. Last month, a couple key papers came out, right? There was the um the paper that came out from Google in which they said they needed to publish it in the interest of responsible disclosure, where they said, you know, they can run Shore's algorithm with 1200 qubits at scary. And then there was also the um the paper between Caltech and Berkeley in which they talked about quantum computers can break crypto algorithms with just 10,000 qubits. Right? So it's kind of a logical qubit setup. Yeah, it's getting it's getting closer though. The quantum edge, you know, we were thinking of this as a 10, 15 year problem. Those two papers at the end of the month last month started to show us that this problem is maybe at our it's it's not quite at our doorstep, but it's a heck of a lot closer, I think, than we originally thought. And I think with so much investment and so much, you know, growth in this industry, right? You know, in the quantum business, um, we are seeing a bit of a hit hit a peak, right? And it's great that there's been so much advancement, but it does mean that that quantum cliff, if you will, is kind of inching ever closer, right?

SPEAKER_00 3:26

Well, most banks are getting prepared. If a bank were not prepared, say one of the major US banks is not prepared, is that a cataclysm? Is are we talking here about billions of dollars of losses or what is this?

SPEAKER_01 3:36

Well, this is the thing, right? I mean, you know, a quantum attack um, you know, could have catastrophic impacts, right, throughout the supply chain, right? There's been a couple, couple quotes um around, you know, what the probability is quite high. We're looking at a third of a probability of happening in the next 10 years. And also it could wipe out, you know, potentially trillions of pounds, right? Or trillions of dollars or euros out of the global supply chain. I think the biggest thing is that um a quantum attack would not just necessarily be localized because of the complex interconnected nature of our financial, you know, institutions and our schemes and everything. It would have global impact around liquidity and things like that. And that's quite scary, isn't it? Right. Um, I think, you know, obviously you want to try to defend against that. And I think there's it's worth investing in. You know, if the quantum cliff ends up not happening, at least the best that you've done is you've improved and gotten ready, gotten quantum safe, right? You know, NIST has made the guidelines very clear and very easy for institutions and and organizations like the one I work for to solve for. Um, and at the worst, if the quantum cliff doesn't hit, at least you've improved your security posture in the process. But also if it does hit, you're prepared and you're on the front foot, right?

SPEAKER_00 4:52

You'd say your organization is quantum ready?

SPEAKER_01 4:55

Yeah, we we've gone through the NIST quantum safe and we feel you know, kind of prepared um and compliant and you know, really thankful for organizations for giving standards um like that for organizations like myself to follow. Yeah.

SPEAKER_00 5:07

How do we how do we avoid a two-tier world with large institutions versus small institutions, the larger ones being prepared, the small ones aren't? Larger nations, smaller nations, some are prepared, some are not. How what do we do?

SPEAKER_01 5:19

Gosh, I don't know if you can ever solve for it fully, but a couple of things come to mind, right? I'm a massive fan of digital public public infrastructure, right? Um, I travel a lot to India for my work, and UPI is an absolutely amazing tool. There's also a similar concept in Kenya and other countries in Africa, right? These kinds of things, digital public infrastructure can lower the cost of transactions and lower the barrier to entry, right? So I view that and investments in that as a really great thing. It's really cool when you're in India in a remote place, you can pay by, you know, contact lists. Whereas I don't know that you can say the same in some Western countries, even, right? Um, so I think there's some things for us to learn there. Um, you know, I think obviously DeFi is an another way to kind of remove, you know, the inequalities. And the more support, I'm a massive fan of us leaning into that and leaning into stable coin initiatives and the like. Um, you know, we can look at, you know, we've already been kind of looking at regulations and risk posture and, you know, kind of shaping our regulations around risk and kind of becoming more tolerant of risk in some environments. And I think the regulators have shown that they're quite open to those kind of conversations with us when it's safe and when it's quantified risk and everything, so we can kind of lower barriers to entry. Um, you know, I think those are a couple of things that come to mind. I don't know that we'll ever hit a um a kind of full equality because the really the the as of right now, the amount of money it takes to be able to pour your investments into, you know, kind of uplifting your technology to be ready and, you know, to be on the front foot, it's really quite a high barrier to entry right now, right? Um, but I think there's a couple of things we can do. I think there's things we can learn from, you know, more developing parts of the world where they actually are in some ways a bit more digital native, and there's things we can learn in some of the ways that they're building things. And I think because maybe they don't have the barrier of legacy infrastructure, there's some things we can learn there around how to lower the barrier to entry.

SPEAKER_00 7:16

Yeah. Yeah. Some people would also argue that we need to treat quantum security as a global public good.

SPEAKER_01 7:20

Indeed.

SPEAKER_00 7:21

We need to work on shared tools, common standards, cross-border collaboration, those types of initiatives.

SPEAKER_01 7:26

I think at least good principles and cooperation amongst nations. You know, you know, we're starting to see that with AI and different postures towards AI, right? Quantum is kind of one step behind, right, in terms of becoming a part of the general vernacular. So I'm really hopeful that we'll start seeing some really good principles-based approaches and some cooperation in this.

SPEAKER_00 7:44

There's probably a lot to learn from the AI world, as you say. They are a little bit ahead. Indeed. Indeed.

SPEAKER_01 7:47

They're just a little bit ahead in terms of the buzzword vernacular, I would say, for right now.

SPEAKER_00 7:52

Let's maybe take a look at quantum indeed in investment banking. I mean, Europe is not, for example, doing too badly. They're like seven of the 15 top banks, as they are called, active in quantum are in Europe. Um, but the leader is probably HSBC in general, you would say, or JP Morgan, maybe on the investment banking side. Would you mind talking a bit about what these guys are up to at JP Morgan, for example?

SPEAKER_01 8:13

Sure, yeah. I mean, I've been following JPM. They've been working quantum for about 10 years. Um, and um, you know, they've done a lot with advanced financial models and you know that kind of a thing with quantum. I really like that they've um leveraged the open source community a bit. Um, they publish their libraries for error correction in quantum. I think if you are a groundbreaker in this space, there's a bit of a giving back to the wider community and helping to kind of uplift and build this capability. You know, we are dealing with technology here in quantum that's RD mode, right? Um, so I was really happy to see that that JPM and JPM has always been, you know, kind of a big supporter of that ecosystem. Um, HSBC, I you know, paid attention to their their big published bat like six months ago um with IBM. They improved their bond price predictions by 34% using IBM Quantum in trading. I'm an ex-IBMer, so you know I was always quite keen to see that. That was quite exciting. Um HSBC also participated in the uh the QKD network here in the UK between Oxford University and also BT, another company I used to work for. Um, you know, so that was another, you know, initiative that's quite close to my heart, and also getting at the how do we get on the front foot with the defense and everything, cyber defense around quantum. I know they're doing a lot around like algo trading and everything. You know, that seems like a logical next step for them. Um, and they can get, they're seeming to get an incredible amount of increased margins and greater liquidity by utilizing quantum. So it's interesting to see where this where this field will continue to flow, right?

SPEAKER_00 9:44

Um you always see, and it's the same in healthcare, you obviously see certain certain players running ahead of the others in pharmaceutical, Maheim, Nur Novo Nordisk in banking, clearly at JP Morgan. Two-thirds of the jobs in quantum and finance are at JP Morgan, apparently.

SPEAKER_01 9:57

Indeed, yeah. I mean, they've been pouring a lot of money into this, and they have a whole RD very focused ecosystem, which I think is great as a bank that they've been able to tap into that, right? Because we we do have to remember this technology is still very much in research mode, right? Um, so when we're deploying it, we're talking about kind of safe pilots, proofs of concepts, things we can demonstrate to the regulators and things like that, do working hands in hand with you know our local regulators, you know, in the UK, B of E and you know, and and working with FCA around how do we demonstrate that we can do this safely and everything. So I think um I think that's really quite it's quite cool to see that they've done that, you know, for us um at Lloyd's. We we've been working on quantum in the fraud space. We're starting to do some simulations, advanced simulations and portfolio simulations. So I'm really looking forward to seeing how that kind of grows.

SPEAKER_00 10:47

Yes, no, no, but it's interesting. Some some some go hard, some go slow. I mean, there was an article actually at Bloomberg today, uh indeed highlighting the differences between JP Morgan and how active they are in quantum versus a Goldman Sachs who started early but then seem to have lost a bit the momentum. And and and it's a clear divergence, and it's interesting. It is interesting, yeah.

SPEAKER_01 11:07

I think I think if you I would be interested to see to compare those companies, their um their IT investment. Um, because I think you know JPM has always been one that has poured a lot of money into tech and has really led tech first, right? Um, and and kind of led with those propositions and seeing the value that that brings. So, you know, it's great to see. I'm a big fan of organizations like that, so it's it's great to see them reaping the rewards from it. Yeah.

SPEAKER_00 11:30

Before we come to the UK and to Lloyd's indeed, I mean, what do you think of the other European banks like São Paulo Intessa, BBVA? There's a number of them active. I I don't know whether you have a.

SPEAKER_01 11:40

I've encountered it a bit less, I'll be honest. You know, we kind of I've been benchmarking myself against you know the other UK banks and particularly HSBC because of their global reach, right? I think it makes sense for them and you know to be able to work in these technology spaces. And now we're starting, you know, as a largely UK domicile bank, we're starting to um to dip our toes into quantum and do some experiments and everything and and demonstrate that. So I've been really kind of focused on that with always keeping an eye to um to the North American, you know, financial institutions. I think a lot of that, maybe that's just a bit of unconscious bias. I think a lot of the innovation ecosystem is really centered around North America as well. And so we are seeing some of that. I'd love to see a bit more coming out and a bit more um sharing from some of the European banks and our European counterparts that are closer to home about some of the experiments they're running. Yeah.

SPEAKER_00 12:30

Would that have been different in a no-brexit situation? It would have been nice.

SPEAKER_01 12:34

It definitely would have, right? Because that would have been our peer group. Um, indeed. Yeah.

SPEAKER_00 12:38

What does the UK government want and what does it do when it comes to quantum?

SPEAKER_01 12:42

Well the the regulator is, you know, to assure they're to assure our readiness and manage risks, right? Um, and B of E um released a paper last year that was focused on the technologies they believe will have the greatest impact, and that included AI, DLT, and quantum, right? So I was great, it was great to see that. Um, it's great to see, you know, through PRA, them taking strides around, you know, building sandboxes, working collaboratively. And my experience with the regulator has been it's very much a collaboration and a cooperation, right? They're there for a reason and there to put safe guardrails to protect ultimately the business customers and consumer customers that we have, right? So we're there to kind of show to them that we can use these technologies in a safe way. And I think that they've shown their openness to it. And I look forward to continuing to demonstrate that and test and learn together, really.

SPEAKER_00 13:35

Bank of England is a good partner. Yep. Yeah.

SPEAKER_01 13:38

Yeah, absolutely. I mean, you know, they've they've shown their openness, right? I think it's all about when dealing with these regulators, it's all about explainability from our perspective, right? They're not there stopping us. And on the contrary, they're saying, you know, lean into this, right? We want you to lean into this. But um, but they want us to kind of do it in a safe way, right? They exist for a reason, they're an absolutely vital part of our of our ecosystem, right? In all industries, right? Um, and I and um I really do look forward to working working hand in hand because there's very much an open door there, what I've seen, to test and learn and to show. Yeah.

SPEAKER_00 14:12

When we first spoke, you said you were indeed developing Lloyd's point of view, I think is what you called it on quantum. Would you want to elaborate a bit on that?

SPEAKER_01 14:19

Sure, yeah, that's evolved. We are um we're right now, we've been working quite heavily with um IBM. There's been something published around some of the work that we've been doing in in quantum. This is really in the fraud space, um, where we think it'll have a massive impact. Um, and we've seen some really green shoots from that early trial. Um, we're now starting to extend that to um simulations around liquidity and cash flows in my world. And so, you know, my team has been been working with um working with um both IBM and Google, who are two of our strategic tech partners, and both of whom I would consider quantum leaders really in the space. Um and we've been running, it's really kind of very much now in experimentation mode. We want to share what we've learned, share what we've learned about the technology, be open with the regulators, talk about what we found, um, and uh continue to share more and continue to shape this as this technology is kind of on the cusp of becoming a bit more accessible, I would say, now it's becoming a bit more accessible with the advances in technology from a quantum perspective. That, you know, look, Google's got quantum chips, right? Um, so it is kind of at our doorstep. You can get it in the cloud. You can get all of this in if you even just have a, you know, regular public cloud um account. So it's now at the point where we're starting to operationalize that and we're gearing up for um June to have a kind of a point of view on what we think um, you know, as of right now, a point in time point of view on where we think it's gonna have the most impact from a cash management and payments perspective.

SPEAKER_00 15:49

Would you work with startups, with quantum startups? Do you?

SPEAKER_01 15:52

Um we as of right now, our ecosystem is really kind of limited to some of the leaders, right? Um, but I'm always keeping an eye to some of the startups, right? I think we can learn a lot from those communities and learn a lot about their capabilities. I think where where we are a bit more inclined to want to work with one of the big established players is because of our regulatory obligations and everything. And and that's often a lot of overhead that big organizations are quite well prepared for. Whereas startup world is, you know, I kind of want them to move fast and break things and kind of do that so that we can take these great stri strides ahead. And I don't necessarily want them to kind of be going through an explainability and things like that, right? You don't want them to slow down. So we've kind of been a bit less, I would say, in the startup, but I'm always kind of keeping an eye and through um our partnerships, right? The startups that our providers are working with, you know, we've talked about IonQ and things like that. That that's a partner of um Google's, you know, who they partner with, we kind of use their steer around the ones that are kind of getting there and everything, you know, the ones that are that are making great strides.

SPEAKER_00 16:54

So I mean in the UK banking ecosystem, of course, we talked about a few, but how are the other high street banks doing, such as Barclays or NatWest? Is that the same level of activity as Lloyd's?

SPEAKER_01 17:04

I could see an experimentation. I've seen a bit from NatWest, um, you know, doing some experimentation in quantum and everything, same same ecosystem partners as us, working with IBM and everything, right? You know, I'm glad to see the leaders. And I've just really seen some little experimentation here, but I think it's good. I think everyone is doing it, whether they're publishing it yet or not, or socializing or not. And I think we should also be mindful to not just socialize our successes. Sometimes it's also okay to socialize if it just doesn't work for us, right? I, you know, quantum up until, you know, kind of really this year, it was kind of financially inaccessible for all but the big multinational investment banks, right? Now, with the advancements in the technology, the price is starting to come down, it's becoming more commoditized, it's available in the public cloud. Now it's getting more accessible. But um, but I think we should also be not afraid to publish where we tried it and it didn't work. Yeah, exactly. Um, because it's a point in time, again, as we always kind of say, these are RD technologies. It might not work now, but it might work later. But I think that also feeds the ecosystem as well. Um, so I would like to see a bit more of that as well. You know, don't be afraid to say if it we tried it and it didn't work great, you know, or it just wasn't for us right now. We couldn't find a use case for us for right now. Um, that is how we really start to move the ecosystem forward. Yeah.

SPEAKER_00 18:21

How many people work on quantum in Lloyd's at this point? You would say, a relatively small group. A relatively small group.

SPEAKER_01 18:28

Yeah, within within the tens, twenties, I would say, um, work on quantum and not necessarily 100% of their time, right? Um, it's largely something that, you know, I have an innovation organization that focuses on quantum. We have a group innovation organization that supports orgs like mine, that, you know, gets us access to these groundbreaking technologies and everything, connects us with the right vendors, and steers us to do it in the safe way. So I would say it's relatively small and relatively nascent for right now. Um and if it really does take off and we really see a you know good benefit in it, makes economic sense. I could see in the next couple of years that really growing exponentially. I mean, as of a couple of years ago in the bank, we didn't have that many people working in AI. We had a lot of data scientists, I think. We've always had a lot of data scientists, you know, in in the banking world, but now we've got hundreds of AI folks, right? So I could see quantum going in that slope as well.

SPEAKER_00 19:21

Yes. Yeah, interesting. I mean, because of course there's quantum talent shortage. So it might be hard when you want to scale it.

SPEAKER_01 19:28

I mean, we've been focusing right now on training, right? There is an awful lot of training out there. Um, I'm really quite impressed by a lot of the, you know, company, big companies, big players like IBM's and Googles of the World. They make all of this open. You can get free quantum compute time from IBM. I think that's great. You can try out Kiskit, you know. I think it's really, really cool. Um, and I think it's wonderful that these organizations that are large enough and have the resources to be able to provide this training for free are doing that. And I've been trying to encourage my team to lean into it and learn it. I've been trying out Kiskit myself. Um, you know, I'm a massive fan. I think I've got to upskill as well. Um, so I'm I really appreciate that they've kind of lowered the barrier for training as well because it is quite a very new technology, and you could go back to school for 10 years and probably still get a PhD and still not know everything there is to know about quantum, right? Um, so I think it's great. Yeah.

SPEAKER_00 20:21

Sure. Do you have any insights in how the fintech world is approaching this, the neo banks?

SPEAKER_01 20:26

Oh gosh. I I've I've seen a bit less, I would say, from the fintech world in terms of quantum. Um, you know, I've seen obviously like Coinbase has done a bit, right? Um in that space. But from the other fintechs, and particularly UK-based fintechs, I haven't seen a lot yet. So if they're doing it, you know, again, it might be a case of they're not publicizing it a whole lot. Um, but it it it if they are doing it, I do also wonder if it's it's an economies of scale kind of a thing, right? Because it's now only just now become accessible to large organizations like the one I work for. FinTechs, whilst they have exponential growth in terms of customer volumes, um, a lot of them profitability-wise are kind of various points on the curve, right? And this still is a technology that requires a significant amount of investment or a significant name and a significant tech partnership. And I think traditionally the fintechs haven't really partnered with the IBM's and Googles of the world, right? Yeah, this is true.

SPEAKER_00 21:22

At the same time, they're more open to innovation. Yeah, they're more open to innovation.

SPEAKER_01 21:26

I haven't I haven't seen a whole lot yet. I'm sure it's out there, right? Um, and I do know there's a fair bit of it in the open source world. Um, so I do see bits and bobs of that. But um, I'll be paying attention, obviously, right? You know, share more. I think that's a big thing. You know, I like to share. I think we should all we can all benefit from sharing more.

SPEAKER_00 21:43

Do you follow at all what happens in China and quantum finance?

SPEAKER_01 21:46

Oh gosh, of course. I mean, China was the first to crack RSA, right? If if I was being bullish, I would say they're gonna make strides, massive strides in quantum, right? If we're worried about breaking quantum encryption and things, I would be Keeping a close eye to China. You know, China has reversed the course in terms of being very closed ecosystem of late. You know, they've they open source Deep Seek, right? Their AI AI models are all open source now, right? They've open source chip designs, things like that. So we've seen a real sea change in the last couple of years, I think, with China. Um, and I'm glad to see it. I'm glad to see them also leveraging the open source community to publish and share and see the mechanism that that provides, that that's a very apolitical organization, right? Um, and it's really a consortium of individuals. So I I think Quantum is really, you know, I know in China they're pouring a lot of investment in it, and I'm hoping to see more. I'm hoping them just to participate a bit more in the open source community, and we'll start to see and use that as a you know pure playing field and apolitical, even playing field for um for some of their innovations to make its way across the borders as well.

SPEAKER_00 22:55

Yeah, yeah. There is like a company like SpinQ that's already having computers in what, 30 or so countries.

SPEAKER_01 23:00

Uh yeah, yeah. They um, I mean, definitely in like the Southeast Asian countries and everything, right? You know, they really can take a foothold quite easily and everything and then kind of expand to the West from there, right? I mean Alibaba Cloud expanded that way, right? And now that's now that's one of the big big cloud providers.

SPEAKER_00 23:16

So you see it as a source of excitement, not so much a source of security.

SPEAKER_01 23:19

Yeah, well, I th I think, yeah, I think just because we're seeing a sea change, I think we do need to be mindful, right? Of you know, that that this is a a and you know, we do need to be mindful of the the real security threat that this poses, and that in every application of it, there are good actors and bad actors, right? And there will be people pursuing it from an academic and a you know purely knowledge-based or a money-making perspective, and then there will be ones who will be pursuing it from an exploitative perspective and everything. I think we have to keep our eyes, eyes and ears open and encourage. If we don't encourage the sharing, I would rather know, you know, and uh, you know, state state the openness to share, right? And you can always do it via even forums like the open source world and academia and things like that, right? Invite people to participate more. Um, but we do always have to keep an ear to the fact that there are adversaries, right? So, and be very, very mindful of that. Okay.

SPEAKER_00 24:12

So, China aside, something that we haven't yet talked about, but I want to ask you as well is how how exposed do you think Bitcoin is, Ethereum, Solana? Do you uh uh do are you in?

SPEAKER_01 24:20

Ooh, I mean, good good question, right? Uh well, up until the papers of about a month ago, we were thinking 10 to 15 years to break ECDSA, yeah. Um, I don't know, might be a bit bit quicker than that, right? Um, you know, uh you it really does the Bitcoin encryption algorithm really does need uh, you know, hundreds of millions of qubits, right, in order to break the encryption algorithm, right? So I think we are, you know, we still have a bit of time, but it is marching ever faster. And I think one of the biggest things with Bitcoin is the risk of the large number of dormant wallets that we have out there, right? And the vast, what, about a third of the supply, they reckon, is permanently lost or permanently dormant or whatever, right? It's someone had us on a hard drive like that, you know, famous guy that threw it out throughout his hard drive and has been searching for it for years because he's got 250 million in Bitcoin on it, right? Um, but there's an awful lot of the supply that's locked in that, right? So how do we deal with upgrading the upgrading the blockchain when there's such a significant portion of the volume that's not actively traded on it? How do we deal with that?

SPEAKER_00 25:29

How do you approach it?

SPEAKER_01 25:30

I don't know if I have a good answer for it because removing it from the supply will just like decimate the price, right? And we already, you know, Bitcoin is obviously always quite, quite volatile and has shown some volatility in price, but I think this would be kind of catastrophic, right? Um, and might be reputationally quite difficult, especially as we're now approaching conversations about stablecoin and you know, tokenized sterling and all these things that I think are like great. I'm so happy that we're actually having these kind of conversations. I think it would do a bit of reputational harm to the technology as well. So I don't know if I have an easy answer for it. It's a tough one, right?

SPEAKER_00 26:06

I think they are alert to it now. It can have to be. Uh it cannot not be. Um what about these bigger quantum startups? Because as I understand, you wouldn't work with uh with startups that have just come into existence, but there are some really big startups out there: Quantinum is one, IonQ, Regetti, D-Wave. Any views on those?

SPEAKER_01 26:23

I mean, personally, I'm quite bullish on on quantum, right? I'm you know, I'm gonna be paying attention to the quantinum IPO this year, right? You know, they were backed by Honeywell and everything, right? Massive manufacturer, so it'll be really interesting. I mean, these are high risk and high reward, right? If they if they really pay off and if if we really do unlock the value of quantum. I mean, we could see this stock market breaching uh ever new highs and you know, the first like multi-trillion dollar company, right, um emerging out of the quantum world, but it's still very volatile, right? And I think anyone that um personally invests in quantum stocks like myself has seen the swings and roundabouts, right? Um it is definitely something that as the technology is being developed, it's kind of you know maturing and kind of growing and and everything. So I, you know, kind of, you know, I would say caution, obviously, but I'm obviously quite optimistic in it, right? And I think it's really interesting where they're pushing things, right? Because these companies are really quite interested in pushing the boundaries, moving us along. And it'll only be once we get to kind of commercialized quantum that we can really start unlocking it on a massive scale, right? So I'm all for pushing the boundaries and you know, being a bit reckless and not necessarily leading with, you know, price and and revenue in mind, but really driving it because this is still an RD technology, right? So we need players in that space to kind of start shaping it, yeah.

SPEAKER_00 27:48

But talking indeed about investing in quantum, where would people go? This is not investment advice, we're not gonna be able to do that.

SPEAKER_01 27:53

Yeah, of course, of course.

SPEAKER_00 27:54

But people have have a number of options. They can invest, I guess, in big tech, but then it's not specifically attributable what the stock does to quantum.

SPEAKER_01 28:01

True.

SPEAKER_00 28:02

Um, we have some of these companies that have spaced, and and there have been quite a few of late. I don't know if you followed that at all, but they have like five or six six new SPACs being announced. Uh, have you got a view on that?

SPEAKER_01 28:12

Yeah, there have been an awful lot of spacks in this space, and I think that's because of the risk, right? The vehicle is quite attractive to, you know, quantum stocks because we're still not sure if this is going to become commercially viable. Um, you know, personally, I've been following, you know, kind of those early, early stage companies that have like kind of just gone IPO. You know, I've been following obviously different parts of the supply chain. I kind of follow the manufacturing parts of the supply chain. Massive fan of Righetti. I've been following them. I'm hoping that they will kind of evolve. But you can think of if you're looking for something that might be a little bit less risk exposure, um, you know, part of part of the supply chain, a part of the that is always gonna be there, like the manufacturing piece or the you know, the chip manufacturing, or you know, kind of a bit less exposed to some of the massive swings. There's also some ETFs, some quantum ETFs. ETFs, yeah. I've been seeing a couple of years ago, I saw there was a first quantum. I was remember talking to one of my friends about we've got to get in on quantum this. Someone released a quantum ETF. This is so cool. If we we could do investment management, investment advice for what to put in that ETF. I think it's quite a difficult space to manage. The fund managers must have a task, but it must be quite a and fascinating world to be in to manage and to see this technology, right? Um, and to prove it out and everything. Um, you know, there's there's obviously a fair, fair bit of VC world around this still, right? All these things are still very early stage. Um, but you know, always a balanced portfolio. You always have to take a little bit of risk. I would I certainly take the risk on quantum personally.

SPEAKER_00 29:41

What what do you think of hedge funds and quantum?

SPEAKER_01 29:44

I mean, I guess I kind of view because this is still something that's quite in the early stage. I really am a bit more favorable towards the VC community and everything fostering these companies because these are all um, you know, and quite channeling them towards various aims, um, you know, hedge funds and wealth extraction, you know, that kind of a thing, right? I I don't think we're quite there yet in terms of commercialization of quantum. And I think we have a ways to go in terms of, you know, the research and building out the capabilities and everything. And that's why I like to see, you know, really the VC world kind of backing this and stuff and kind of channeling that because this is still very much growing. And it's also something that's very much in the public interest as well, right? You know, as much as there's so much we could unlock with quantum, we also have to keep in mind, like we've been saying, the adversaries and everything. There's so much of the public interest behind this that I would love to see all of our big brains that focus on, you know, growing the next big thing, kind of focusing on that rather than, you know, kind of taking something. I don't think we're quite understanding how we commercialize it yet. I'll be honest.

SPEAKER_00 30:52

You see it more as a VC play today, not so much B or hedge funds.

SPEAKER_01 30:55

Yeah, I think because it's not fully commercialized yet. I mean, we've been doing experiments, but we haven't even been thinking about commercialization. We're just there to have find out how the technology could be. But monetization will be a whole nother level. And I don't think we're quite there yet necessarily. Um, and when we do, you know, obviously then you know there will obviously be a space, but I'd I'd love to see the research go a bit further, I would say.

SPEAKER_00 31:23

Yes, yes, yes. Okay. We're gonna round up with uh a question on these uh prediction markets all over the news. The Calcies, the poly markets, yeah, yeah. Now it's news particularly because Trump's family has been investing apparently in some of them. Yeah. Now on Calci, they mostly talk about Cytochrome P450 or Shol's Schorle's algorithm. Yeah. On the poly market one, they talk about the US government taking stakes in quantum companies, and you can make bets on that.

SPEAKER_01 31:48

Ooh, if I could make a bet, gosh, I think, well, you know, the the US government to take a stake, stake in Intel, right? So a lot of this is, you know, you could see where it could go. I think I tend to think that US companies have taken a stake in a business because of its role in the supply chain. So I would be looking for, you know, like a chip manufacturer, like Intel, right? And that is a very non-American move, right, by the way, to kind of back a chip manufacturer. It's very much what China does, obviously, but it's not, it's not a very American move. Gosh, if I were to say, I mean, if I think, and I think that a lot of the um, you know, anyone who follows Intel like myself, you know, I was an Intel customer for many years. Um, following their swings in stock prices, one might say, is it was it maybe more so moder motivated by the too big to fail kind of a thing, um, rather than taking a vested interest in what they're building per se. But I don't know, you know, just just having been a follower of it, um, you know, the US tr kind of tends to take, takes, take a stake in companies that are kind of on that teetering, right? Um uh but I do think, you know, if they were to take a stake somewhere that's in a part of the supply chain in the manufacturing supply chain, right? You know, people building the rigs or the equipment, you know, you know, a company like that. But also Intel is not purely a quantum company, right? Um, you know, they're also making AI chips, they're making general purpose chips, that kind of a thing. Could they take, could the US take a stake in IBM or Google? Whoa, that would be a whole nother thing. I don't know. But but I do think we should be thinking about um these kind of technologies and what's in the natural national interest, right? And pouring a lot of our investment money from a natural national interest perspective in this, right? In the UK, they've released the sovereign um quantum fund and things like that, right? I love to see that and pouring money into building the research at home out of you know your universities and your country and everything. And I would love to see a bit more of that and taking the national interest rather than buying stakes in companies and everything. But um, but yeah, but could the US ever take a stake in IBM? Oh, I don't know. That would be my prediction. I don't know where that stacks in the poly market. It feels the most like Intel, right? In terms of, you know, in the quantum world, but interesting.

SPEAKER_00 34:08

Yeah, it is interesting to see what these guys uh indeed uh predict uh or what you can indeed bet on. Any final thoughts on on your part on quantum and finance or Lloyd's and quantum and finance you can choose?

SPEAKER_01 34:20

It's it's an exciting world, right? Um, you know, I have I have an innovation team as a part of my organization that's focusing on this technology, and we're just at the early phases. Um, we're just excited about trying something new, really. You know, we're we're excited about learning how to do something a bit differently and you know, working hands in hands with, you know, the ecosystem, the schemes we're a part of, the regulators and the global markets that we're a part of to see how we can make sense of this technology and um and more most crucially how we can protect our our ecosystem and protect our interests going forward and work hand in hand on that. So I'm real bullish on quantum. I think it's great, and I'm looking forward to seeing um the pace I can think back to my first ever conversation back when I worked at IBM about quantum back in 2018. I was talking with the Ministry of Defense about quantum, quantum QKD, what later became the QKD project. Um, and you know, early on quantum keys and encryption and everything, and to see where it's come in those many years, and then you know, to look back in another eight years, where will we, how much further will we be? We'll be with commercially viable quantum by then, I'm hoping. So, you know, from a from an idea and a concept and something that was really out of reach to now something that we are actively experimenting in in eight years feels like quite a quick time frame for this technology. So I'm looking forward to the next date. Yeah.

SPEAKER_00 35:38

Wonderful. Thank you very much for being on the show.

SPEAKER_01 35:40

Thank you so much. Thank you.