C-DAC builds quantum key distribution sandbox for bank-to-bank transactions

The Centre for Development of Advanced Computing (C-DAC) is developing quantum key distribution technology that could enable highly secure communication between banks, a scientist at the organisation said on Thursday.

Speaking on the sidelines of the Global Fintech Fest 2026 in Mumbai, C-DAC scientist Deepu CV said the organisation has taken up several projects in quantum technologies, including quantum key distribution, as it widens its research beyond advanced computing.

"Speaking about quantum key distribution, this is the future of communication in which highly secured transactions between banks can happen," he said.

As part of this work, C-DAC has built a quantum key distribution sandbox to demonstrate quantum-secure transactions between banks. "This is actually a quantum key distribution sandbox which is for quantum secure transaction between bank to bank," Deepu said.

Describing how the system works, he said a quantum key generated at one bank's receiver is shared with another bank, with encryption applied at both ends. "There is a quantum key which is generated in one bank receiver and which has been given to the other bank. Both sides encryption will be there," he said.

Quantum technology draws on quantum mechanics, the branch of physics that describes the behaviour of matter and energy at extremely small scales. Quantum computing applies these principles to process certain calculations differently from conventional computers.

Quantum key distribution, or QKD, is a related but distinct technology. It uses quantum properties to let two parties establish encryption keys in a way designed to make any attempt to intercept the key detectable. That property makes it relevant to banking and financial services, where secure communication is critical.

Deepu said C-DAC's role is primarily that of a research and technology provider rather than a developer of consumer-facing payment systems such as the Unified Payments Interface. "We do the back-end kind of thing. So we are the technology providers. Being an R&D company, we develop the technology and give it to the industry as a TOT kind of thing," he said, referring to transfer of technology, under which research institutions hand over developed technologies to industry for deployment and commercial use.

He added that the emerging field still faces hurdles, including the small number of players working on it and the stringent security demands of banking transactions. "There are quite a few challenges because this is a new technology coming in this area," he said.

C-DAC functions under the Ministry of Electronics and Information Technology and works in areas including high-performance computing and advanced digital technologies. Deepu said the presence of banks, non-banking financial companies and other financial-sector participants at the Global Fintech Fest could open up opportunities for technology transfer, industry interaction and feedback on emerging technologies.