Research Spotlight: BBVA Explores the Practical Value of Quantum Annealing for Portfolio Optimisation

One of the defining themes to emerge from Quantum.Tech World 2026 was the industry's transition from scientific promise to commercial application. The conversation has evolved beyond "Will quantum computing work?" to a much more important question: "Where can quantum technologies deliver measurable business value?"

That shift is particularly evident in financial services.

Banks have long been recognised as some of the earliest potential beneficiaries of quantum computing. From portfolio optimisation and risk modelling to fraud detection, derivatives pricing and treasury management, many of the industry's most computationally intensive problems are natural candidates for quantum algorithms. However, separating theoretical potential from practical advantage remains one of the biggest challenges facing the sector.

Few organisations are approaching that challenge more rigorously than BBVA.

Led by Escolástico (Esco) Sánchez Martínez, Quantum Principal Manager and Executive Director at BBVA and a long-standing speaker at Quantum.Tech, the bank has established itself as one of the financial sector's leading innovators in quantum computing. Rather than pursuing quantum for its own sake, the team's research focuses on identifying specific business problems where emerging quantum technologies could eventually provide meaningful commercial value.

Their latest preprint, "Quantum Annealing for Dynamic Portfolio Optimization under Realistic Transaction Costs," is an excellent example of this approach.

Portfolio optimisation has been studied for decades, yet dynamic optimisation remains a highly complex problem. Investment managers must continuously rebalance portfolios while considering changing market conditions, risk, diversification requirements and, critically, transaction costs. These costs can significantly erode returns and often determine whether an investment strategy is commercially viable in practice.

Rather than relying on simplified academic assumptions, BBVA's researchers deliberately model these real-world complexities. Their study incorporates realistic trading constraints, transaction costs and portfolio allocation limits, creating a framework that more closely reflects the decisions faced by institutional investors every day.

The team then compares a quantum annealing-based optimisation strategy against established classical approaches, including Buy-and-Hold and Conditional Value at Risk (CVaR), using a diversified portfolio of 21 global assets.

One of the paper's most interesting findings is that when transaction costs exceed approximately 35 basis points, the quantum-derived strategy begins to outperform the classical benchmarks in terms of Sharpe ratio—one of the most widely used measures of risk-adjusted investment performance. While this does not represent universal quantum advantage, it does identify a realistic operating regime where quantum optimisation could begin to deliver tangible benefits.

Perhaps equally important is the measured tone of the research itself.

Rather than making sweeping claims about quantum supremacy, the authors present a balanced assessment of both the opportunities and current limitations of today's quantum hardware. They demonstrate how hybrid quantum-classical workflows can be used to tackle practical optimisation problems while acknowledging that further advances in hardware performance, scalability and algorithm development will be required before widespread commercial deployment becomes feasible.

This pragmatic approach reflects a broader trend we saw throughout Quantum.Tech World 2026. Across discussions with financial institutions, government agencies, technology providers and enterprise leaders, the emphasis has shifted away from speculation and towards evidence-based evaluation of where quantum can create genuine competitive advantage.

The research also highlights the importance of collaboration across the quantum ecosystem. The work was developed within the QMIND Consortium, co-funded by the European Union through the European Regional Development Fund (ERDF), bringing together expertise from academia and industry to accelerate the development of practical quantum applications.

For organisations exploring the future of quantum computing in financial services, this paper offers more than an interesting technical contribution. It provides another valuable data point in understanding how quantum optimisation may gradually become part of real enterprise decision-making over the coming decade.

As we continue to follow the commercialisation of quantum technologies, it is exactly this kind of research—grounded in real business challenges rather than theoretical benchmarks—that will help define the industry's next chapter.

Read the full preprint: Quantum Annealing for Dynamic Portfolio Optimization under Realistic Transaction Costs on arXiv: https://arxiv.org/abs/2607.03218