Singapore Boosts Fintech Innovation

In recent years, Singapore has emerged as a global powerhouse in the realm of finance and technology, constantly pushing the envelope to promote innovation and nurture talent in the financial sectorThe country’s relentless pursuit of becoming the “Global Smart Financial Hub” has seen significant investments and initiatives aimed at enhancing financial technology (fintech) and fortifying cybersecurity, which are becoming pivotal components of its strategy.

The Monetary Authority of Singapore (MAS) recently issued its annual report for 2023-2024, revealing a bold commitment to inject an additional 100 million Singapore dollars into the Financial Sector Technology and Innovation (FSTI) 3.0 initiativeThis move underscores Singapore’s ambition to elevate the capabilities of financial institutions in quantum technology and artificial intelligence (AI), harnessing their potential for groundbreaking innovation and development.

Through the lens of the FSTI 3.0 framework, MAS aims to propel projects associated with quantum technologies

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The authority has pledged substantial support, which includes initiatives to set up functionalities for quantum computations and security innovationsFurthermore, it will assist financial institutions in collaborating with international technology firms to explore new opportunities in this burgeoning fieldFinancial support from MAS can cover up to 50% of qualifying expenditures, including manpower, hardware, software, licensing fees, and membership costs, available for a duration of 24 months.

According to estimates by McKinsey, the adoption of quantum technology in the financial sector could catalyze the creation of over 800 billion Singapore dollars in value by 2035. Recognizing the transformative potential of quantum computing, Singapore is fostering an environment conducive for financial institutions to embrace this technology, backed by government subsidies aimed at easing their transition.

Additionally, MAS has partnered with the Singapore Institute of Banking and Finance to delve into the impact of generative AI on the financial industry

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This collaborative effort seeks to define the requisite skills needed in the evolving landscape and is set to publish its findings and recommendations by early 2025.

In its quest to bolster cybersecurity within the finance sector, MAS also announced it would allocate approximately 30% funding for pilot projects focused on post-quantum cryptography and quantum key distributionThe primary aim is to safeguard sensitive corporate data from cyber threats, ensuring that client information is adequately protected against various forms of digital attacks, thereby minimizing potential losses.

In an anticipated development, MAS is slated to release a research report on generative AI's transformative role in the financial industry early next yearThis report will also encompass guidelines on managing risks associated with AI technologies, and regulatory measures that must be adhered to

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Simultaneously, a governance handbook driven by the financial industry on the topic of AI is expected to be finalized around the same time.

MAS has long adhered to the belief that technological innovation is the key catalyst for future economic growth, convinced that it can unlock new value and opportunities within the finance industryThe authority’s commitment to fostering technological advancements has been steadfast, continuously unveiling new measures and ramping up funding to bolster innovation and talent cultivation in the fintech sphere.

The journey toward establishing Singapore as a smart financial hub began in 2015 when MAS launched FSTI 1.0, with a commitment of 225 million Singapore dollars for driving technological innovationThis initiative aimed to integrate technology extensively within the financial sector to enhance efficiency, create new opportunities, and effectively manage risks, ultimately improving the quality of service to citizens

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In November 2016, MAS and the Association of Banks in Singapore co-hosted the inaugural Singapore FinTech Festival, which has since grown into one of the world’s largest financial technology events, fostering Singapore’s position in the global fintech ecosystem.

In 2020, MAS introduced FSTI 2.0, pledging an investment of 250 million Singapore dollars over the next three years to accelerate technological advancements in financeThis second phase focused on supporting large-scale innovation projects, developing local fintech talent, and facilitating the digital transformation of the financial sectorBuilding on its progressive journey, in August 2023, MAS committed 150 million Singapore dollars over the next three years towards advancing ESG (Environmental, Social, and Governance)-related fintech, integrating sustainability into financial practices.

While enhancing fintech capabilities, Singapore has concurrently prioritized the security of its financial infrastructure

The launch of a 30 million Singapore dollar fund for bolstering cybersecurity abilities in December 2018 was a significant milestone, aimed at enhancing resilience against cyber threats and fostering local talent in cybersecurityFollowing this, in May 2021, MAS allocated an additional 12 million Singapore dollars to establish a new regulatory technology grant scheme and boosted funding to the existing digital acceleration grant program by 30 million dollars, accelerating the adoption of innovative technologies in finance.

As part of its comprehensive strategy to combat money laundering and terrorism financing, Singapore is set to establish clearer standards for the financial sector, ensuring that high regulatory standards are upheld while promoting healthy growth in the finance industry.

In response to the increased prevalence of scams and operational failures stemming from the financial services sector's heightened digitization, Singapore is leveraging technology to bolster the resilience and security of its banking sector

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