Singapore reinforces fintech hub bid with AI, quantum computing at its helm

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The Monetary Authority of Singapore (MAS), the city-state’s central bank and financial regulatory authority, has committed SGD100 million (US$74.36 million) to boost its finance sector’s quantum computing and artificial intelligence (AI) capabilities.

The investment, announced on July 18, aims to help local financial institutions speed up AI development and adoption in the finance space and establish infrastructure for quantum computing—a rapidly emerging technology that harnesses the laws of quantum mechanics to solve problems too complex for classical computers.

This injection of funds furthers Singapore’s bid to become a regional and global fintech hub, which began with the introduction of the Financial Sector Technology and Innovation Scheme (FSTI) in 2015, “to support the creation of a vibrant ecosystem for innovation in the financial sector.”

In 2022, an updated version of the scheme, FSTI 3.0, was announced by then Deputy Prime Minister Lawrence Wong. Its goal was to “accelerate and strengthen innovation by supporting projects that involve the use of cutting-edge technologies or with a regional nexus, while doubling down on MAS’ commitment to promote a vibrant technology ecosystem for the financial sector.”

FSTI 3.0 initially committed SGD150 million (US$111.5 million) over three years to the progression of AI and quantum computing. Last week, the regulator added another $74.36 million to this pot.

Funding a quantum leap

In the quantum computing space, these funds can be accessed through various grants, namely the Technology Centres grant, the Technology Innovation grant and the Security grant.

Companies exploring quantum computing can receive funding support of up to 50% on manpower and other qualifying expenses, such as hard/software infrastructure, subscriptions and licenses, for a period of 24 months.

Additionally, 50% co-funding support will be provided to advance the exploration and implementation of such quantum solutions, and companies building quantum-based cybersecurity solutions will be eligible for up to 30% co-funding.

“MAS will also work with Institutes of Higher Learning and the Institute of Banking and Finance on talent development initiatives to support the development of quantum capabilities in the financial services sector,” added the regulator.

AI funding

“While financial institutions have been progressively adopting AI, recent technological advancements have made such tools more widely accessible and increased the pace of adoption,” the central bank said.

“With the advent of Generative AI, financial institutions have embarked on initiatives to map the technology’s opportunities and risks, and have begun piloting it across a range of use cases. Nevertheless, the level of AI-readiness and adoption varies across financial institutions in Singapore.”

For this reason, the funds will be deployed to bolster financial institutions’ development and deployment of AI technologies in Singapore and to develop AI platforms to address industry-wide use cases.

“MAS will support financial institutions in establishing AI innovation centres in Singapore for a range of functions including: AI model building and training, deployment of AI models for high-impact use cases, governance and risk management, as well as testing and monitoring,” said the regulator, adding that “there are strong prospects for the financial industry to apply AI to solve industry-wide problems beyond what each financial institution can do individually.”

The FSTI 3.0 scheme is valid until March 2026; however, it may be extended based on its impact on Singapore’s fintech landscape.

MAS not sleeping on fintech

The country’s top financial sector regulator has been increasingly active in fintech over the past few years, not least in regulating the innovative digital asset space.

Last August, MAS announced a new regulatory framework for stablecoins following an October 2022 public consultation. The framework sought to “ensure a high degree of value stability for stablecoins regulated in Singapore.”

More recently, the regulator also increased the risk level for digital asset exchanges in an update to the country’s laws on combating the financing of terrorism (CFT).

Under the update, digital asset exchange platforms—what MAS refers to as digital payment token (DPT) service providers—were elevated from medium-low to medium-high risk, the same level as banks.

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