Financial markets in the MENA region face critical challenges in detecting anomalies within high-frequency trading and cross-border payment systems, where traditional machine learning approaches struggle with extreme dimensionality, class imbalance, and real-time constraints.This paper presents a theoretical quantum-enhanced deep learning framework addressing these challenges through hybrid quantum-classical architectures.We propose a novel hybrid architecture integrating variational quantum circuits (VQC) for feature extraction with transformer-based temporal modeling, achieving a theoretical parameter reduction of 40-60% over equivalent classical architectures.The framework identifies conditions for quantum advantage: high-dimensional sparse features (d > 100), extreme class imbalance (< 0.5% anomaly rate), and distancebased detection.All performance figures are theoretical projections from the literature; empirical validation is designated as future work.Our comparative analysis reveals that quantum kernel methods show theoretical improvement potential over classical baselines under these conditions.
Financial markets in the MENA region face critical challenges in detecting anomalies within high-frequency trading and cross-border payment systems, where traditional machine learning approaches struggle with extreme dimensionality, class imbalance, and real-time constraints.This paper presents a theoretical quantum-enhanced deep learning framework addressing these challenges through hybrid quantum-classical architectures.We propose a novel hybrid architecture integrating variational quantum circuits (VQC) for feature extraction with transformer-based temporal modeling, achieving a theoretical parameter reduction of 40-60% over equivalent classical architectures.The framework identifies conditions for quantum advantage: high-dimensional sparse features (d > 100), extreme class imbalance (< 0.5% anomaly rate), and distancebased detection.All performance figures are theoretical projections from the literature; empirical validation is designated as future work.Our comparative analysis reveals that quantum kernel methods show theoretical improvement potential over classical baselines under these conditions.
Financial markets are complex nonlinear systems characterized by high-dimensional interactions, temporal dependencies, and rapidly evolving asymmetric patterns. Detecting hidden structures and abnormal behaviors in high-frequency financial data remains a challenging problem due to market instability and dynamic uncertainty. This study proposes an innovative quantum neural network (QNN)-based framework for adaptive forecasting and anomaly detection by exploiting quantum representation learning for complex financial systems. The proposed architecture is developed in the Qiskit environment using a hybrid classical-quantum optimization strategy based on a Variational Quantum Circuit (VQC). A quantum feature-mapping mechanism transforms multidimensional financial variables into quantum states, enabling extraction of latent relationships and structural patterns from high-dimensional data. A parameterized quantum circuit is optimized using the ADAM algorithm within a classical-quantum learning loop. The framework consists of two stages: first, multivariate financial dynamics are forecasted using market microstructure, volatility-related, and macroeconomic indicators obtained from the Electronic Data Distribution System (EDDS) of the Central Bank of the Republic of Türkiye; second, deviations between predicted and observed states are analyzed for anomaly identification. Comprehensive experiments on the BIST All-100 Index, trading volume, and monetary indicators demonstrate that the proposed QNN model achieves superior performance compared with ANN, LSTM, Bi-LSTM, LSTM-GRU, CNN, and Transformer-based approaches. The findings indicate that quantum-enhanced learning provides an effective computational framework for modeling complex asymmetric patterns and discovering hidden structures in dynamic systems.
With Deep learning and quantum computing are emerging technologies with transformative potential in financial risk assessment, optimization, and fraud detection. The integration of these fields can significantly enhance the efficiency and accuracy of financial decision-making processes. However, existing fraud detection methods often suffer from high false positives, slow processing times, and limited adaptability to complex fraud patterns. Traditional machine learning models struggle with scalability and computational efficiency when dealing with large-scale financial data. To address these issues, we propose the Quantum-Inspired Neural Networks for Fraud Detection (Q-INN-FD) framework, which leverages quantum-inspired computing principles to enhance neural network architectures. The framework incorporates quantum-inspired feature encoding, variational quantum circuits, and hybrid classical-quantum learning mechanisms to improve pattern recognition in financial transactions. These techniques enable more efficient fraud detection by enhancing model robustness and reducing computational overhead. The proposed method is applied to financial datasets to detect fraudulent transactions, optimize risk assessment models, and improve decision-making in real-time scenarios. Our findings demonstrate that Q-INN-FD achieves higher accuracy, faster processing, and reduced false positive rates compared to traditional deep learning approaches. This paper highlights the potential of quantum-inspired deep learning for revolutionizing financial security and risk management.
Quantum Kernel Methods for Anomaly Detection in High-Velocity Data Streams introduces a novel framework leveraging quantum computing principles to address critical challenges in real-time anomaly detection. By combining the expressive power of quantum-enhanced feature spaces with classical machine learning techniques, the work presents a hybrid architecture capable of identifying subtle anomalies in complex, high-dimensional streaming data. The framework incorporates specialized quantum feature maps that efficiently encode temporal and distributional properties of data streams, while adaptation mechanisms respond to concept drift and evolving patterns. Through systematic experimental evaluation across synthetic and real-world datasets from financial transactions, network security, and industrial systems, the approach demonstrates superior detection performance particularly for complex nonlinear patterns in high-dimensional spaces. The quantum-classical implementation addresses current hardware constraints through optimization techniques and targeted resource allocation, establishing specific conditions where quantum advantage emerges for operational anomaly detection scenarios.
Detecting fraudulent financial transactions is inherently challenging due to extreme class imbalance, complex high-dimensional feature spaces, and the adaptive strategies employed by fraudsters.To overcome these limitations, this work presents a hybrid quantum-classical fraud detection framework that strategically combines conventional machine learning models with quantum computing techniques to enhance predictive reliability.Rich feature representations are constructed by integrating transactional, behavioral, and graph-based attributes to capture both local and relational fraud characteristics.A Quantum Autoencoder (QAE) is utilized to perform efficient dimensionality reduction, enabling compact feature encoding while retaining essential discriminatory patterns.The reduced feature set is subsequently processed using Cat-Boost, alongside Quantum Neural Networks (QNNs) or Variation Quantum Classifiers (VQCs) to leverage complementary learning capabilities.Model outputs are aggregated through a stacking-based meta-classification strategy, resulting in improved generalization and decision stability.Performance evaluation is carried out using fraud-oriented metrics, including recall, precision, accuracy, and false positive rate.Experimental analysis indicates that the proposed hybrid approach consistently surpasses standalone classical and quantum models, achieving superior fraud recall with notably fewer false alarms.These results demonstrate the robustness, scalability, and practical viability of quantum-classical integration, positioning the proposed framework as a promising foundation for next-generation financial fraud detection systems.
Credit card fraud detection is still one of the significant challenges in the digital economy, and most traditional machine learning methods appear to be inadequate fordealing with highly imbalanced datasets and intricate non-linear fraud patterns. This paper introduces and tests Q-fusion enhanced hybrid models, which exploit Quantum-Inspired FeatureMaps to embed classical transaction data in high-dimensional Hilbert spaces with the aim of increasing class distinguishability and performance. Five quantum-boosting classifiers were performed includingand described: Quantum Support Vector Machine (QSVM), Quantum Logistic Regression (QLR), Quantum K-Nearest Neighbors (QKNN), Quantum Gaussian Naive Bayes (QGNB) and Quantum Multi-Layer Perceptron (QMLP). The results show that the Quantum MLP model provided the best performance and reached an accuracy of 99.35%, precision of 0.96, recall of0.92, F1-score of 0.94 and ROC-AUC score of 0.97 which outperformed all quantum-enhanced models as well as classical ANN model.. Quantum feature mapping greatly improved feature separability, especially for minority class fraudulent transactionsand remained compatible with classical infrastructure. These results identify quantum-inspired machine learning as a promising route for enhancing fraud detection in severely imbalanced data sets and can berealized without deploying full-scale quantum hardware. implementation faces hardware limitations ( 27), algorithmic complexity (28), and infrastructure integration challenges (29). Quantum-inspired approaches provide a pragmatic pathway, offering quantum-like advantages through classical simulation (30; 31). Research Problem and Contribution Credit card fraud detection faces interconnected challenges: (1) extreme class imbalance creates severe classifier bias where models achieve high accuracy by predicting all transactions as legitimate while missing fraud (32; 33); (2) feature engineering requires domain expertise to identify transaction attributes, temporal patterns, and behavioral anomalies (14; 34); (3) real-world systems require millisecond classification (35); (4) regulatory compliance demands transparent, explainable systems (36; 37). Despite growing QML interest, empirical evaluations for fraud detection remain limited. Most studies focus either on purely classical methods (8; 32) or theoretical quantum algorithms requiring full hardware (30; 38), creating a gap in practical quantum-inspired implementations. Recent surveys identify this as a critical frontier (26; 39; 40). This research contributions: (1) Implementation and evaluation of five quantum-enhanced hybrid models (QSVM, QLR, QKNN, QGNB, QMLP); (2) Demonstration that quantum-inspired transformations project data into higher-dimensional Hilbert spaces, improving fraud class separability; (3) Empirical evidence of substantial gains (99.35% accuracy, 0.97 ROC-AUC) on classical hardware; (4) Rigorous comparative evaluation with consistent preprocessing and comprehensive metrics; (5) Identification that Quantum MLP achieves synergistic performance combining quantum features with deep learning. Research Objectives This research aims to: (1) develop quantum-inspired feature mapping transforming transaction data into Hilbert space representations; (2) design and evaluate five quantum-enhanced classifiers; (3) conduct comprehensive performance evaluation using imbalanced classification metrics; (4) quantify performance improvements from quantum-inspired transformations; (5) assess computational feasibility for production deployment; (6) provide theoretical explanations based on Hilbert space geometry. Paper Organization Section 2 reviews related work in machine learning fraud detection, quantum computing, and quantum machine learning. Section 3 describes methodology including preprocessing, quantum feature mapping, classifier architectures, and evaluation metrics. Section 4 presents experimental results with performance analysis. Section 5 concludes with key findings and future directions. 2 Related Work 2.1 Classical Machine Learning for Fraud Detection Credit card fraud detection has been extensively studied using classical approaches. Early work established cost-sensitive learning to address class imbalance (41). Logistic Regression provides interpretability and probabilistic outputs (3) but struggles with nonlinear patterns (7). Support Vector Machines identify maximum-margin hyperplanes (5) but face computational challenges (O(n 2 )-O(n 3 )) (42) and performance degradation on imbalanced data (8). Ensemble methods including Random Forest (4) and Gradient Boosting (43; 44) achieve improved stability. Deep learning approaches-Multi-Layer Perceptrons with modern optimization (ReLU (45), batch normalization (46), dropout (47), Adam (48))-achieve state-of-the-art performance with preprocessing (49). Recurrent architectures (LSTM (50), GRU (51)) capture temporal patterns (52), while Autoencoders frame fraud as anomaly detection (53; 54). Imbalance Handling Techniques Class imbalance (¡0.2% fraud) (13) necessitates specialized techniques. SMOTE generates synthetic minority samples through interpolation (6), while SMOTEENN combines SMOTE with Edited Nearest Neighbors for noise reduction (55; 56). Cost-sensitive learning assigns different misclassification penalties (33; 57). Ensemble methods train multiple classifiers on balanced subsets (58; 59).
Financial market prediction and optimal trading strategy development remain challenging due to market complexity and volatility. Our research in quantum finance and reinforcement learning for decision-making demonstrates the approach of quantum-classical hybrid algorithms to tackling real-world finan-cial challenges. In this respect, we corroborate the concept with rigorous backtesting and validate the framework's performance under realistic market conditions, by including fixed transaction cost per trade. This paper introduces a Quantum Attention Deep Q-Network (QADQN) approach to address these challenges through quantum-enhanced reinforcement learning. Our QADQN architecture uses a variational quantum circuit inside a traditional deep Q-learning framework to take advantage of possible quantum advantages in decision-making. We gauge the QADQN agent's performance on historical data from major market indices, including the S&P 500. We evaluate the agent's learning process by examining its reward accumulation and the effectiveness of its experience replay mechanism. Our empirical results demonstrate the QADQN's superior performance, achieving better risk-adjusted returns with Sortino ratios of 1.28 and 1.19 for non-overlapping and overlapping test periods respectively, indicating effective downside risk management.