MUFG Bank, one of the three megabanks in Japan, reportedly invested billions of yen to buy a 18% stake in Groovenauts, a quantum computing startup. The investment makes MUFG the first among Japan’s three largest banks to bet on quantum technology and attempt to leverage it for financial services.
MUGT to Use Quantum Computing for Mitigating Risks
MUFG Bank, the largest bank in Japan and one of the biggest in the world, has invested in Groovenauts, a local startup that develops advanced quantum technology solutions. Through the investment, MUFG seeks to utilize Groovenauts’ quantum tech offerings to improve its financial services.
Specifically, MUFG will use the technology for complex transactions associated with derivatives trading and risk management and boost its operational efficiency. Groovenauts provides computing services via a technique known as “quantum annealing,” which is meant to identify the optimal answer from many combinations.
MUFG acquired an 18% stake in Groovenauts for several billion yen, making the startup the bank’s equity-method affiliate. The move marks the first direct investment in a quantum computing company among Japan’s three megabanks.
The banking giant plans to use Groovenauts’ quantum solutions to cut risks tied to financial derivatives transactions, claiming the technology could reduce the time needed to complete specific tasks from an hour to a few seconds. Further, MUFG is exploring using quantum technology with interactive artificial intelligence (AI).
Why is Quantum Technology Attracting Interest?
MUFG Bank’s investment in Groovenauts underscores the growing interest in quantum technology, which can potentially disrupt numerous industries, including finance. The Tokyo, Japan-based bank seeks to gain a competitive edge in the banking sector through this bet.
Quantum computing is a burgeoning technology that utilizes the laws of quantum mechanics to address issues too complex for classical computers. The rapidly-growing adoption of quantum computing comes as companies face significant economic headwinds, prompting them to look for solutions that can reduce costs, drive revenue, and boost operational effectiveness.
Apart from quantum computing, finance players are also increasingly adopting AI technology. Earlier this year, AI startup FlowX.AI raised $35 million in a funding round to continue developing its platform to improve banks’ digital infrastructure. Meanwhile, as much as 53% of consumers use generative AI solutions to help them with financial planning and investing efforts.
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