HSBC is partnering up with quantum tech firm Terra Quantum to explore hybrid quantum technology applications.

The quantum tech firm said that the project could help to create a hybrid quantum solution for collateral optimisation.

Collateral optimisation is the process of efficiently allocating and managing collateral assets to meet regulatory requirements while minimising costs. It uses mathematical and algorithmic strategies to balance risks, liquidity, and profitability.

Terra Quantum says that existing methods for this process primarily rely on linear optimisation solvers, which can “sometimes falter when confronted with higher complexities”.

It added that the quantum solution could potentially improve the process by effectively handling high-dimensional optimisation problems and potentially providing better scalability.

“Optimisation of capital is one of the core functions in a bank, Quantum technologies have the potential to enhance optimisation solutions across many parts of a financial institution, we look forward to realizing the benefits of this in the near term future," said Vishal Shete, managing director UK, Terra Quantum.

The move comes after HSBC became the first bank to join a quantum-secured metro network run by BT and Toshiba in collaboration with Amazon Web services (AWS).

The bank will now trial the secure connection between its headquarters in Canary Wharf and a data centre in Berkshire 62 kilometres away. The connection uses quantum key distribution (QKD) technology to secure its operations against future cyber threats.

QKD technology uses particles of light and the fundamental properties of quantum physics to deliver secret keys between parties. HSBC said these keys can be used to encrypt and decrypt sensitive data and are safe from eavesdroppers or cyber attacks by quantum computers.

The technology will be tested for use in multiple scenarios including financial transactions and secure video communications.

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