From ‘quantum-enhanced’ to ‘quantum-safe’: Why banks are preparing in advance for the new big threat

The banking sector is prioritizing cybersecurity due to the potential threats posed by artificial intelligence (AI). However, regulators have stepped up as well, implementing cybersecurity measures across the industry. The Reserve Bank of India (RBI) released a new cybersecurity and technology-resilience framework for commercial banks in July, while the Securities and Exchange Board of India (SEBI) introduced an IT Resilience Index for market infrastructure institutions in August. These measures aim to strengthen IT governance, cyber-risk management, and incident response.

Yet, a new threat is on the horizon, emerging from the realm of quantum computing. Traditional computing operates with bits that have values of either 0 or 1, while quantum computing uses quantum bits, or qubits, capable of existing in a combination of 0 and 1 states. This property, known as superposition, enables quantum systems to solve certain problems more efficiently than classical computers.

The concern lies in the fact that powerful quantum computers could efficiently solve mathematical problems underpinning public-key cryptographic systems, which protect digital communications. By amplifying the probability of correct solutions and reducing incorrect answers, quantum algorithms could pose a significant risk to banks’ encryption methods.

Several technology companies and governments are actively working towards transitioning their systems before quantum computers become capable enough to decrypt existing cryptographic methods. This transition involves replacing vulnerable cryptography with post-quantum cryptography (PQC) algorithms, which are resistant to quantum attacks. It is crucial for financial institutions to identify vulnerable cryptographic systems and replace them before quantum computers reach the necessary level of power.