July 12, 2023
Yuki Nakamura, Nikkei staff writer
TOKYO -- Japan's MUFG Bank has invested in Groovenauts, a Japanese startup that offers quantum computer technology, Nikkei has learned. The megabank seeks to use quantum technology for financial services, including for complex transactions such as derivatives trading, asset risk management, and to enhance its operational efficiency.
Groovenauts offers computing services using a method called "quantum annealing," which finds the optimal answer from a vast number of combinations. Groovenauts connects quantum computers owned by research institutes with companies that want to use them. By combining data processing technology with artificial intelligence, the company makes it easier to use quantum computers for business and other purposes.
Quantum technology has the potential to shake up the financial industry. MUFG Bank aims to get a head start in the race to acquire the technology by investing in Groovenauts.
MUFG Bank has invested several billion yen to buy 18% of Groovenauts' outstanding shares, making it an equity-method affiliate. This is the first direct investment in a quantum computing startup among the three Japanese megabanks. The bank will also send a board member to the company.
The bank hopes to use quantum technology to reduce the risk associated with financial derivatives transactions. MUFG is also considering using quantum technology in conjunction with interactive AI.
It is said that the technology could cut work tasks that currently take an hour to a few seconds. The bank has already begun demonstration tests in several fields and will introduce the technology in areas where they have a good chance of practical application as early as fiscal 2024.
The quantum computing industry will be worth up to $850 billion when the technology matures around 2035, according to a forecast by Boston Consulting Group. The financial industry offers a particularly promising application for the technology, along with the development of electric vehicle batteries, semiconductor materials, and drug discovery. Quantum computers have the potential to revolutionize risk analysis and portfolio optimization by taking advantage of their advanced number-crunching capabilities.
In Japan, Toyota Motor, Sony Group, JSR, Mitsubishi Chemical Group, and other companies are thinking of introducing quantum computers. In the financial sector, Mizuho Financial Group and Sumitomo Mitsui Financial Group are also conducting research on how to utilize the technology. The race for practical applications is heating up abroad as well, with Goldman Sachs collaborating with Amazon Web Services.
MUFG Bank is accelerating its technology acquisition through investments in tech companies in Japan and abroad. The bank announced at the end of last year plans to acquire Kanmu, a Japanese startup offering deferred payment services. It has also invested in an Israeli fintech company that provides loans using AI technology.
Image: People are reflected in the logo of Mitsubishi UFJ Financial Group's bank of Tokyo-Mitsubishi UFJ (MUFG) in Tokyo, Japan, May 16, 2016. REUTERS/Thomas Peter/File Photo