How Quantum Computing and Post-Quantum Cryptography Will Impact Cybersecurity for the Financial Services Industry
According to the consulting firm McKinsey, “the four industries likely to see the earliest economic impact from quantum computing—automotive, chemicals, financial services, and life sciences—stand to potentially gain up to $1.3 trillion in value by 2035.”
Based on this, quantum computing sounds like it would be a tremendous advantage for the financial services sector. However, the quantum computing coin has two sides. On the other side, the impact of quantum computing on cybersecurity is a tremendous disadvantage for the financial services sector.
This conclusion isn’t just hot air. In 2022 the President of the United States signed several Presidential directives for advancing quantum technologies, while also signing a National Security Memorandum addressing the risks posed by quantum computers to cybersecurity. Furthermore, in December 2022 the Quantum Computing Cybersecurity Preparedness Act was signed into law. It addresses the need for the U.S. government to create a strategy to transition to post-quantum cryptography.
What are Quantum Computing and Post-Quantum Cryptography?
Quantum computers leverage the principles of quantum mechanics to process information using quantum bits, or qubits. Unlike classical bits, which have two possible values, qubits can exist in multiple states simultaneously, enabling quantum computers to perform complex calculations at exponentially faster rates for certain types of problems.
Post-quantum cryptography aims to develop encryption algorithms that are secure against attacks from quantum computers. These algorithms are designed to withstand the power of quantum computing and provide long-term security for digital communications and data protection. As quantum computing technology advances, the need for quantum-resistant encryption becomes increasingly urgent to protect individuals, businesses, and governments from potential security breaches and data vulnerabilities.
Impact on the Financial Services Industry
Insecure Communications
Secure communications are crucial to maintaining the integrity, confidentiality, and trustworthiness of financial services due to the sensitive and confidential nature of the information involved. Without proper security measures financial transactions, client data, and other critical information is vulnerable to unauthorized access, interception, and manipulation. This can lead to severe consequences, including financial fraud, identity theft, and compromise of sensitive business operations, jeopardizing the trust of clients and stakeholders and potentially resulting in financial losses and regulatory repercussions.
Cryptographic algorithms are fundamental to securing communication channels. Quantum computers will be capable of breaking currently used cryptographic algorithms and threaten the security of your existing communications network. Quantum key distribution (QKD) offers a potential solution for secure communication. QKD leverages the principles of quantum mechanics to enable the exchange of encryption keys. Companies will eventually need to adopt QKD to secure their communication channels in a quantum era.
Insecure Data
Quantum computers will be able to decrypt sensitive data that was previously considered secure. Additionally, encrypted data that had previously been stolen but not decrypted could eventually be decrypted as quantum computing accelerates. This could lead to the ghost of past data breaches rising from the dead to haunt your organization again.
To combat this organizations must transition to quantum-resistant encryption standards as soon as possible in order to safeguard their data against potential quantum threats.
Questionable Data Integrity
Data integrity ensures the accuracy, reliability, and trustworthiness of financial information, transactions, and records. Financial institutions rely on data for decision-making, regulatory reporting, and maintaining the confidence of clients and stakeholders. If data integrity is compromised it can have severe consequences including financial losses, regulatory non-compliance, and reputational damage.
Quantum computers could potentially manipulate data in novel ways, raising concerns about data integrity. Companies will need to implement additional measures to detect and prevent quantum-induced data tampering.
Compromised Authentication Systems
Quantum computers will be able to compromise existing authentication systems that rely on classical cryptographic methods. Organizations will need to explore and adopt quantum-resistant authentication mechanisms as soon as possible to ensure the security of their systems.
Supply Chain Risks
The widespread adoption of quantum computing will lead to supply chain risks as organizations need to ensure that the components and technologies they use are quantum-safe. This involves assessing and updating the security of hardware, software, and communication systems.
Evolving Regulatory and Compliance Standards
With the evolution of quantum computing and its implications for cybersecurity, regulatory bodies are exploring, or have already introduced, new compliance requirements. Organizations should stay informed about these changes and adapt their cybersecurity practices to meet emerging standards.
What Does This Mean for Your Organization?
The advent of quantum computing poses both challenges and opportunities for the financial services industry. In order to remain secure proactive measures must be implemented to address vulnerabilities and transition to quantum-resistant technologies.
Organizations need to prepare for the post-quantum era by staying informed about advancements in quantum-safe cryptography and gradually transitioning their cybersecurity infrastructure to be quantum-ready.
For more information check these out:
Enhancing Your Cybersecurity While Preparing for Post-Quantum Cryptography
Building a Strong Cybersecurity Foundation for Financial Services
A Comprehensive Asset Inventory Platform
In order to prepare for the eventual migration to post-quantum cryptography, the Quantum Computing Cybersecurity Preparedness Act directed government agencies to create an inventory of their IT assets, prioritize them, and report their findings on a yearly basis. These are the critical first steps to securing your organization against the threat of quantum computing.
The Redjack solution includes an AI engine capable of not only giving you complete visibility into your connected IT asset infrastructure but also mapping how those assets connect to each other and to your critical business functions. Armed with this information you can develop a data-centric strategy to migrate your systems to a post-quantum infrastructure, as well as improve the efficiency of both your IT operations and overall business functions.
Contact us to learn how Redjack has been helping the CISOs of the world's largest corporations and government agencies improve their cyber resilience.
