Singapore's financial services sector expanded by a robust 6.8% in 2024, significantly outpacing the 3.1% growth recorded the previous year. However, the Monetary Authority of Singapore (MAS) signalled that such momentum is unlikely to continue.
“Looking ahead, we do not expect financial sector growth to continue at the pace of the last few years. Amidst prevailing global uncertainties, MAS will continue to strengthen the competitiveness and capabilities of our financial sector...[by] fostering responsible AI adoption in the [industry as well as]... enhancing the resilience and security of digital financial services,” says MAS managing director Chia Der Jiun at a July 15 media briefing.
As part of these efforts, MAS has launched the Pathfinder programme, or Pathfin.ai, to support financial institutions in the early stages of their artificial intelligence (AI) journey.
By curating a library of use cases, industry-validated solutions and best practices, Pathfin.ai seeks to reduce the time and effort needed to identify and implement AI solutions. The programme also offers skills training aligned with the institution’s chosen AI tools through partnerships with established training providers.
So far, 20 financial institutions across banking, insurance, capital markets, and payments have joined the Pathfinder programme.
In parallel, over 30 financial institutions have established AI functions in Singapore, with some serving as global AI competency centres. These institutions are building specific AI use cases for local use as well as piloting projects before scaling them to other markets. "We welcome more financial institutions to build AI capabilities in Singapore and join the growing community of AI practitioners within our financial sector," says Chia.
See also: MAS announces additional $100 mil funding for FIs pursuing AI, quantum projects
As AI adoption expands, MAS is also strengthening governance. The central bank is developing supervisory guidelines to address risks related to AI models, data quality, technology, and third-party reliance. This is because poor risk management could lead to flawed decisions or harm to customers.
Following a thematic review of AI practices in key banks last year, MAS published an information paper outlining good practices. The upcoming guidelines will provide further clarity on areas such as model evaluation, testing, and explainability.
Complementing this, MAS and the MindForge consortium are co-developing an AI governance handbook to offer practical guidance on managing AI risks, including those related to third-party systems.
See also: MAS, banks and tech companies to jointly work on quantum security
Both the supervisory guidelines and AI governance handbook will be released for consultation later this year.
Getting ready for quantum
MAS is also preparing the financial sector for emerging risks from quantum computing. While financial institutions are expected to maintain high resilience and recover swiftly from disruptions, future threats such as quantum-powered decryption could compromise sensitive customer data and financial transactions.
To address this, MAS has been testing the viability of quantum-safe solutions for financial services. At the briefing, Chia announced the successful completion of MAS’s Quantum Key Distribution (QKD) sandbox, developed in partnership with several banks and technology firms, including DBS Bank, HSBC, Oversea-Chinese Banking Corporation (OCBC), United Overseas Bank (UOB), SPTel, and SpeQtral. The sandbox trialled QKD for securing sensitive financial communications.
A technical report outlining the trial’s findings will be published soon. Chia adds: "The report will also highlight challenges for future work. We are confident that further work by the industry can address these challenges and enable wider adoption of QKD in time to come."
To support the sector’s transition, MAS published an advisory in February 2024 highlighting steps financial institutions should take to prepare for a quantum-safe future.
The central bank will now begin engaging financial institutions to develop a transition roadmap, as a full migration will be complex and time-consuming, says Chia. This includes reviewing how they manage cryptographic inventory and identifying critical systems that should be prioritised for quantum-safe migration.
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These efforts complement MAS’s announcement last year that it will provide an additional $100 million to support financial institutions developing AI and quantum capabilities.
The funding comes under the Financial Sector Technology and Innovation (FSTI 3.0) scheme, which was launched in 2023 with an initial commitment sum of $150 million. FSTI 3.0 supports projects in AI, regulatory technology, green fintech and quantum.
Infographic: MAS
Read more about MAS’s FY2024/25 annual report and related announcements:
- MAS net profit rises to $19.7 bil in FY2024/25 with investment gains more than doubling y-o-y
- S’pore GDP growth ‘likely to slow’ in 2H2025 but core inflation ‘should remain subdued’: MAS
- Singapore’s AUM grows 12% to $6.07 tril in 2024; net inflows rebound with 50% y-o-y growth
- S’pore’s financial sector growth to slow after ‘unusually strong’ years: MAS
- S’pore 2025 growth ‘expected to slow’ amid ‘challenging’, ‘uncertain’ trade environment: Gan
- Upcoming back-up system between NETS, banks to allow contactless payments during outages: MAS
