UOB is exploring how quantum computing could make derivatives valuation faster and more scalable.
The bank has partnered Singapore’s Centre for Quantum Technologies to test how quantum methods could help value complex financial products such as options, futures and swaps.
Banks use these products to manage market and financial risks, but pricing them can require heavy computing power when standard methods are not practical.
Today, banks often rely on Monte Carlo simulations, which run thousands of possible market scenarios to estimate fair value. This can be slow and resource intensive for more complex products.
Lawrence Goh, Head of Group Technology and Operations at UOB, said,
“As financial markets become more complex, the need for faster and more accurate risk modelling continues to grow.
By investing early and building a clear deployment roadmap, we are laying the foundation for the next generation of banking capabilities – where research and innovation are translated into practical solutions that strengthen risk management and resilience, catalyse scale, and provide long-term value to our customers.”
UOB and CQT will study whether quantum computing can handle these scenarios more efficiently under certain conditions, while improving valuation accuracy and risk modelling.
Researchers from CQT at the National University of Singapore will work on the project with support from the National Quantum Computing Hub.
Dr Patrick Rebentrost, Principal Investigator at CQT and Associate Professor in the NUS Department of Computer Science, said,
“We know in theory that quantum computing could help with the difficult task of pricing financial derivatives. The collaboration with UOB is an opportunity to advance that theory into practice, testing our methods against real-world scenarios.
We will develop beyond-Monte Carlo quantum techniques that could significantly improve our ability to evaluate complex risk scenarios.”
The first phase will focus on path-dependent instruments, where pricing depends on several market variables and past price movements.
These are among the harder derivatives to value using traditional methods.
The project follows Singapore’s National Quantum Strategy, announced in 2024.
CQT and the National Quantum Computing Hub are both supported under the strategy.
Featured image: Edited by Fintech News Singapore, based on image by mrsiraphol via Magnific
