The Monetary Authority of Singapore (MAS) said it has recently teamed up with banking giants DBS, HSBC, OCBC and UOB to develop and roll out quantum security capabilities in Singapore.
The regulator said a memorandum of understanding, which the different entities have signed, includes plans to study and test the application of quantum key distribution in the micro-state’s financial services sector via a range of sandbox projects.
Network provider SPTel and SpeQtral, a spin-out company from the Centre for Quantum technologies in Singapore, have also come onboard as part of the sector-wide digital resilience push, MAS confirmed.
“As quantum technology advances, it is vital for the financial sector to safeguard against potential cybersecurity threats that may be brought about by the technology,” stressed Vincent Loy, assistant managing director for technology at MAS.
“This will help MAS and financial institutions better understand QKD’s potential impact on operations and address challenges early.”
Loy added that “these technology trials can also inform and shape technology and cyber risk management policies towards quantum-proofing our financial systems.”
One of the primary goals of the collaboration is to develop secure communications by deploying fiber quantum key distribution and roll out space-based quantum communications technologies.
“Quantum key distribution can help financial institutions (protect the exchange of cryptographic keys to address the cybersecurity threats posed by quantum computing,” MAS said in a statement.
“We are keenly aware of the dangers this fast-developing technology can bring.”
Eugene Huang, DBS
Eugene Huang, Group Chief Information Officer at regional banking giant DBS, explained his banks decision to take part and support the memorandum of understanding.
“While DBS has been familiarising ourselves with quantum computing’s potential to transform financial services, we are keenly aware of the dangers this fast-developing technology can bring,” Huang said.
“This MoU represents a significant step forward in safeguarding Singapore’s financial sector against looming cybersecurity risks associated with quantum,” he added.
Moreover, “by participating in the development of QKD use cases, we are not only enhancing our defences but also setting new standards for futureproofing our financial systems against bad actors seeking to exploit encryption technology,” Huang shared.
Testing
MAS and the other companies involved will focus on a range of areas including conducting a QKD proof-of-concept sandbox on financial sector use cases to evaluate its viability, effectiveness and applicability to financial services, and determine the feasibility of using QKD for quantum-safe communications within the financial sector.
Moreover, they will test the validity of the security properties of QKD, such as detecting eavesdropping attempts and preventing unauthorised access or tampering of QKD transmissions.
“This will help to verify QKD’s capability to provide robust security for sensitive data transfers, and enhance trust in its deployment within the sector,” MAS pointed out.
Furthermore, they plan to enhance technical competencies through knowledge exchange to equip MoU participants with the skillsets to support the transition towards adopting quantum security solutions when they are commercially available.
Responding to the agreement, Praveen Raina, Head of Group Operations & Technology at Singapore-based OCBC, pointed out that “quantum technology holds immense potential and relevance for the financial sector especially in mitigating cybersecurity risks.”
He added that: “recognising this, on top of partnering with the wider industry, we are taking proactive steps to invest in talent and infrastructure capabilities in this area.”
Rise of quantum computing
In recent years, quantum computing technology has been developing rapidly and has demonstrated the potential to break commonly used cryptography and encryption algorithms, which is increasingly posing a major cybersecurity concern for banks and other financial services firms.
In February 2024, MAS issued an advisory to the country’s finance sector on the cybersecurity risks associated with quantum technology.
The financial services watchdog went on to provide recommendations for banks and finance firms to safeguard themselves against the identified threats, including to carry out proof-of concept trials with quantum security solutions.
More recently, MAS launched a quantum track under its relatively new Financial Sector Technology and Innovation Grant Scheme to provide funding support for quantum projects and capabilities.
“This memorandum of understanding builds on these initiatives and provides a collaborative framework for trialling the application of quantum security solutions in financial services,” MAS explained.
In the coming months, MAS and participating banks will experiment with QKD solutions jointly provided by SPTel and SpeQtral, the regulator continued.
In addition to the memorandum of understanding, MAS earlier announced it will support the establishment of quantum computing and security innovation functions in Singapore.
MAS will hand out grants, which will provide 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.
AI efforts
The collaboration comes only weeks after MAS announced last month to commit S$100 million, or close to $75m, to support the island-state’s banks and other financial services firms to design, test and build capabilities in artificial intelligence technologies.
The capital was meant to speed up the advancement of AI related innovation and adoption in financial services, MAS said.
“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 body explained at the time of the announcement.
“The level of AI-readiness and adoption varies hugely across financial institutions in Singapore.”
– MAS
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, it stressed.
“Nevertheless, the level of AI-readiness and adoption varies hugely across financial institutions in Singapore,” the regulator warned.
“MAS will therefore bolster financial institutions’ development and deployment of AI technologies in Singapore,” it said.
The watchdog firmly believes that Singapore has “the potential to become a centre of excellence for anchoring AI capabilities, such as in the development of applications, as well as testing and deployment of AI solutions for the financial sector.”
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.
It also plans to develop AI platforms to address industry wide use cases.
“There are strong prospects for the financial industry to apply AI to solve industry-wide problems beyond what each financial institution can do individually,” MAS clarified.
This involves the development of frameworks and platforms for policies and protocols that enable secure and privacy protected data exchange where financial institutions can collaborate on industry-wide use cases, the regulator concluded.
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