Hugh Son, CNBC Senior Banking Reporter, tells "Worldwide Exchange" that JP Morgan is refocusing its quantum computing team to find real-world uses and prepare for future cybersecurity threats.

New York

JP Morgan has named Rob Otter, previously at State Street and a former leader of JP Morgan's blockchain business, as the new head of its quantum computing research group. This follows the departure of previous leaders Marco Pisto and Charles Lim, both recognized for their academic and scientific contributions. The leadership change marks a shift towards a more commercially driven approach in the bank's quantum research, aiming to accelerate the development of practical applications.

Quantum computing holds significant potential for financial institutions, with possible uses in portfolio optimization, fraud detection, and most notably, cybersecurity. JP Morgan is preparing for a future where quantum computers could break current encryption methods, prompting the bank to invest in quantum technologies to safeguard sensitive financial data against emerging cyber threats.

JP Morgan doubles down on quantum to prevent future cyber threats

Hugh, why don't we get into it? So they made a hire. They actually hired somebody from State Street. What does this person do, and what does this bank want to do with quantum computing? Yeah, that's right, Frank. So J.P. Morgan has, for the past five years or so, had an internal group that conducted research into emerging technologies like quantum computing that could solve problems in finance. So Marco Pisto was the former IBM inventor who led the group since 2020, who's recently left the bank, according to people with knowledge of the situation. One of his deputies, Charles Lim, who led the bank's global head for quantum communications and cryptography, has also left. The new leader that we just talked about of the research group is a guy named Rob Otter, okay? And he's, according to the J.P. Morgan memo that I obtained, is a veteran of the tech industry. He was most recently at State Street as global head of digital technology and quantum computing. And before that, he actually led J.P. Morgan's blockchain business. So the move where you are seeing, you know, you're going from essentially two academics, people who were really respected in the scientific community, and who, you know, Marco Pisto, for instance, had about 280 patents to his name, that was pretty impressive, to going to, from those academics to people who, to a person who's seen as more sort of commercially minded, it's seen as a possible sign for, that J.P. Morgan wants to accelerate its efforts to, for, you know, to find commercial uses for this research and technology, Frank. All right, so I think a lot of companies are trying to find, as you just mentioned, commercial uses for quantum technology. When it comes to discovering drugs, we've heard the CEO of Sandbox, AQ, tell us it can help speed up drug discovery. Cybersecurity companies are looking at it as a way to kind of bolster cybersecurity defenses against hackers. What does a bank need quantum computing for? Like, what problem are they trying to figure out? Is it gonna help with trading, better investment ideas, risk? I mean, what area could it even be used for? Yeah. Yeah, that's, it's a fascinating question, Frank. So there are, you know, what I would consider pretty boring applications, like portfolio optimization, things like that, you know, fraud detection, other things like, you know, in terms of defense. I think the most revolutionary reason why banks like J.P. Morgan really want to be involved with this is that if you actually had a quantum computer, you could break, effectively, the world's encryption. And so you have a case where I'm told that there are nation states who are, you know, caching, holding onto, you know, encrypted data with the hopes that one day they'll be able to break the encryption once in 15 or 20 years, as Jensen Huang said, we actually have a quantum computer. So, you know, if this day is coming, if the quantum moment is coming, banks like J.P. Morgan, who obviously, you know, are a store and a protector of tons of financial information, really have to get ahead of that and have to be able to defend against those attacks.

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Los Angeles

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