In unveiling its Annual Report for Financial Year 2024/25, the Monetary Authority of Singapore (MAS) outlined a forward-looking agenda that balances prudence with innovation. As global uncertainties persist, MAS remains committed to strengthening the competitiveness, resilience and trustworthiness of Singapore’s financial sector. (opengovasia.com)

A key focus this year is accelerating the responsible adoption of artificial intelligence (AI), bolstering the operational resilience of digital financial services and preparing the ecosystem for the future of quantum threats and scam defence.

AI is rapidly becoming a differentiator among financial institutions (FIs) and financial centres worldwide. In Singapore, more than 30 FIs have established AI functions, with several serving as global AI competency centres. These institutions are using Singapore as a testbed to incubate and deploy AI solutions before scaling them internationally. MAS continues to encourage FIs to build on this momentum and contribute to a growing AI practitioner community.

To support institutions at earlier stages of AI adoption, MAS launched the Pathfinder programme (PathFin.ai), a collaborative industry initiative that provides access to curated use-cases, validated solutions, best practices and aligned skills training. With 20 FIs already on board, the programme aims to reduce barriers to effective implementation and build AI literacy across banking, insurance, capital markets and payments.

MAS also emphasised the importance of responsible AI use, highlighting risks related to models, data, technology and third-party dependencies. A thematic review of key banks revealed varied levels of maturity in AI risk management.

In response, MAS is developing supervisory guidelines covering AI risk materiality assessments, evaluation, testing and explainability. These guidelines will be accompanied by a governance handbook developed with the MindForge consortium, offering best practice recommendations, particularly in areas like managing third-party AI risk.

To support workforce transformation, MAS and the Institute of Banking and Finance Singapore (IBF) are expanding training in generative AI. A pilot involving nine FIs will explore how AI can augment eight existing job roles. Findings from this initiative will inform upskilling and reskilling strategies for the years ahead and equip professionals with future-ready, adaptable skillsets aligned with emerging AI-driven roles.

Beyond AI, enhancing digital resilience remains a core priority. With digital services now central to daily transactions, MAS is reinforcing operational continuity standards. A key milestone is the upcoming rollout of stand-in capabilities for NETS electronic point-of-sale systems, ensuring that contactless payments remain possible during system disruptions. MAS will soon expand this initiative to QR code payments, recognising their growing popularity.

Future-readiness also means anticipating emerging threats. MAS is actively preparing for quantum computing risks, which could one day compromise existing encryption standards. In collaboration with Banque de France and industry partners, MAS completed successful trials using Post-Quantum Cryptography and Quantum Key Distribution (QKD) to secure sensitive financial communications. A technical report will soon be published, guiding industry-wide adoption of quantum-safe solutions and enabling early action against long-term cryptographic vulnerabilities.

To support this transition, MAS released an advisory in early 2024 outlining initial steps FIs should take and will begin engaging institutions to develop roadmaps for quantum-safe migration, starting with inventory reviews and prioritisation of critical assets.

As digital threats evolve, scam prevention remains top-of-mind. MAS is working with banks and payment service providers to phase out vulnerable authentication methods and roll out features like Money Lock, real-time fraud surveillance, pre-transaction warnings and cooling-off periods for high-risk activities.

These safeguards, while adding some user friction, reflect a necessary shift towards stronger protection and public trust as digital transactions grow in volume, velocity and complexity.

MAS’ multi-pronged approach, anchored in technological innovation, robust governance and ecosystem-wide collaboration, aims to position Singapore’s financial sector at the forefront of digital transformation, ready for both present challenges and future possibilities.