BMO bets on quantum computing and AI to predict earthquakes and respond to natural disasters

BMO Turns to AI and Quantum Computing to Predict Earthquakes

Bank of Montreal is betting on artificial intelligence and quantum computing to help predict earthquakes and respond to wildfires as part of the Canadian bank's expansion in the US. Kristin Milchanowski, the company's chief AI and quantum officer, said she has created and received a provisional patent for a quantum algorithm that will eventually help BMO and other scientists predict earthquakes. The bank is also using AI to help it mobilize mobile banking units to communities impacted by wildfires like the ones Los Angeles experienced last year. The technological advancements are a key part of BMO's expansion in the US after it acquired California's Bank of the West for about $16 billion in 2023. While the quantum algorithm to predict earthquakes still need to be tried and tested, BMO is going to integrate the wildfires technology into its emergency response system. "Over 60% of our clients are in a territory where they could be impacted by earthquakes, both in Canada and in the US," Milchanowski said in an interview at Bloomberg's office in Chicago. "Down the road, we absolutely can use our own research to better inform our insurance positions, and we can do that even with the wildfire work that we're doing." Predicting natural disasters is becoming more important for banks and insurers as climate change increases their occurrence. Last year's wildfires in Los Angeles killed 31 people, destroyed more than 16,000 structures, forced hundreds of thousands to evacuate and caused as much as $131 billion in economic and property losses. BMO, which has its US headquarters in Chicago, has been investing in research to develop quantum applications. It joined International Business Machines Corp.'s quantum network in early 2025. Milchanowski, who has worked for a number of financial institutions including Morgan Stanley and JPMorgan Chase & Co., reiterated IBM's projection for a usable quantum computer to be achieved by 2029. Quantum Advantage The finance industry is expected to be one of the biggest beneficiaries of quantum computers, which are exponentially more powerful than traditional machines. The technology helps sort large amounts of data and solve complex mathematical problems that would take binary computers days, months or even years. "The pace at which things are coming at you is faster and faster and faster -- I think that's going to remain true," said Milchanowski, who runs a small team of quantum specialists. "Quantum is probably three years away. Five to 10 years ago, I would have guessed it was 20." The fast deployment of AI is accelerating quantum, but also bringing security and implementation challenges. Milchanowski said her team won't take on any AI initiatives unless they move one basis point for the firm. That could happen by either generating one basis point of revenue, or creating an equivalent amount of cost reduction for the bank. BMO is among major finance firms that have recently met with the Bank of Canada to discuss cybersecurity risks raised by Anthropic's latest artificial intelligence model Mythos and similar AI models. BMO only works with Amazon Web Services, Microsoft and Google for its AI tools, but it may have exposure to other tools via its suppliers. She declined to comment on whether the bank has access to Mythos. AI Threats "I believe banks are very well equipped to handle the pace to which new threats come, and on this one in particular," she said. "We are collaborating with other banks on this, we are talking to governments, we're talking to Big Tech. We are all in this together as an industry and as a sector, and I think that's what people can have confidence in." BMO is expanding into tokenized cash in partnership with CME Group Inc., the US's largest derivatives exchange. The tokens will serve as another form of instruments in addition to fiat currencies, to settle trading for regulated institutions and smoothen out commercial payments. It's the first step towards 24/7 trading. It will still take time for round-the-clock trading all days of the week to become a reality, said Derek Vernon, who oversees BMO's treasury and payment solutions in North America. The bank already provides banking services to about 60% of the customers of CME, which is planning 24/7 trading for its crypto contracts. "Whenever we roll out something, there's always early adopters," Vernon said. "But our clients themselves have to make investments in their capabilities, and uplift their own customer relationships to be able to do that. So I don't see that happening in the very near term."

Why a Canadian bank is trying to predict earthquakes with quantum computers

BMO has filed a provisional patent on a quantum algorithm for seismic forecasting, and is sending mobile branches to wildfire zones with AI dispatch. The bank says it is the future of risk. Banks are not, as a rule, in the earthquake business. They are in the business of pricing risk, which is adjacent. Still, the operational job of telling the ground when it is about to move has historically belonged to seismologists, governments, and a handful of specialist insurers. Bank of Montreal would like to change that, or at least to share the work. In an interview with Bloomberg published on 1 May, Kristin Milchanowski, BMO's recently appointed Chief AI and Quantum Officer, said the bank had filed a provisional patent on a quantum algorithm intended to help forecast earthquakes. The same team, she said, is using artificial intelligence to dispatch mobile banking units to communities affected by wildfires, including those that swept through parts of Los Angeles last year. It is an unusual portfolio for a Tier 1 Canadian lender, and it is meant to be. BMO formalised its bet last month with the launch of the BMO Institute for Applied Artificial Intelligence & Quantum, announced on 9 April. The Institute, an enterprise-wide centre of excellence, is intended to consolidate the bank's research, governance, and applied work in two technologies that have, until recently, sat at opposite ends of the maturity curve. AI is everywhere in financial services, integrated into fraud detection, credit scoring, and customer service. Quantum computing, by contrast, is still mostly a research line, valuable in theory and largely unproven in deployed banking workflows. Milchanowski, who spent the previous eighteen months as the bank's chief AI and data officer, leads the Institute as its founding director. Days after its launch, BMO announced partnerships with Quantum Industry Canada and the Chicago Quantum Exchange, two of the more established quantum policy and research bodies in North America. On paper, this is corporate housekeeping. In practice, it is a deliberate signal: BMO wants to be read as a quantum-curious bank, not just an AI-fluent one. The provisional patent is, for now, the most concrete artefact of that ambition. Quantum algorithms are well-suited, in principle, to problems involving high-dimensional optimisation and combinatorial search, the kinds of computations that overwhelm classical hardware as data sets grow. Seismic forecasting, which relies on enormous volumes of geophysical signal data and models that are notoriously difficult to fit, is one such problem. Milchanowski did not, in the published interview, claim that BMO had cracked it. The patent is provisional, the algorithm has not been independently benchmarked, and useful quantum hardware capable of running such workloads at scale does not yet exist outside research labs. What the filing represents is intent, and a small bet on optionality. If quantum advantage in this domain ever materialises, BMO will own a piece of it. There is also a more immediate commercial logic. Better catastrophe modelling has direct applications in insurance, mortgage portfolios, and infrastructure lending, all areas where Canadian banks have meaningful exposure and where climate-driven loss patterns are forcing a rethink of underwriting. If quantum is a long-dated option, the bank's AI work is already in production. Milchanowski told Bloomberg that BMO is using AI models to identify communities cut off by wildfire and to route mobile branch units, essentially banks-on-wheels, into them. The Los Angeles fires of early 2025 left tens of thousands of residents without access to physical banking; AI dispatch, in the bank's telling, helps reduce the lag between displacement and service restoration. This is not a glamorous use case. It will not feature in earnings calls. But it is the kind of work that distinguishes AI-as-marketing from AI-as-operations, and it is consistent with a broader pattern at BMO, which has been quieter than some peers about its AI roadmap and more visible about its applied projects. The timing also matters. Bloomberg reported earlier this month that the wider financial industry is bifurcating in its quantum stance. Goldman Sachs has scaled back parts of its quantum research effort, while JPMorgan continues to invest. BMO's announcement positions it on the investment side of that line, although on a smaller scale. Whether any of this produces returns within the typical investor horizon is another question. Quantum hardware capable of solving real-world problems faster than classical alternatives is, by the consensus estimate of researchers, several years away. BMO is essentially arguing that the risks of being late outweigh the costs of being early. It is a defensible position, particularly for a bank with substantial climate exposure and a reputational interest in showing it takes the technology seriously. It is also, by definition, a bet that may not pay for years, if it pays at all. For now, the most novel thing the bank can show for it is a piece of paper at the US Patent and Trademark Office and a fleet of mobile branches arriving where the smoke has cleared.