SG60: From AI to quantum – can Singapore lead the next era of financial innovation?
Just as the country has helped define the future of digital banking and cross-border payments, it now has the opportunity to lead in quantum-powered finance
ARTIFICIAL intelligence (AI) is already reshaping financial services from real-time fraud detection to precision-led customer insights. But the next leap forward will come not from AI alone, but from its convergence with quantum computing, a transformation that could redefine how we model risk, secure trust, and deliver innovation within the industry.
Quantum computing uses rules of quantum physics to manipulate information in new ways, enabling it to solve certain problems that are out of reach of even the most powerful classical computers.
This opens new frontiers in optimisation, simulation, and machine learning, areas where finance, by nature, demands speed and precision. For example, quantum computing has the potential to accelerate specific components of financial systems, such as risk modelling, optimisation engines, and derivative pricing, where traditional methods struggle with combinatorial complexity.
But this transformation brings both opportunity and urgency. The same power that unlocks new use cases also threatens to render today’s encryption standards, like RSA, for example, obsolete.
And while large-scale quantum computers are not yet commercially available, the risk of “harvest now, decrypt later” tactics – where attackers steal encrypted data now in anticipation of using quantum computers to decrypt the information when the technology matures – means data exchanged today may be compromised in the future. This dual promise, and peril, demands preparation.
Singapore: from readiness to leadership
Singapore is one of the few countries not just anticipating this shift, but actively shaping it.
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Announced in June 2024, the Republic’s National Quantum Strategy, backed by nearly S$300 million from the National Research Foundation, aims to solidify the country’s status as a quantum technology hub over the next five years.
This includes initiatives such as the Centre for Quantum Technologies, Quantum Engineering Programme 3.0, National Quantum Processor Initiative, and National Quantum Scholarships Scheme.
The National Quantum Office recently launched the Hybrid Quantum-Classical Computing 1.0 initiative, setting aside S$24.5 million to accelerate real-world quantum applications and support research in this field.
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Simultaneously, the Monetary Authority of Singapore (MAS) has committed an additional S$100 million under the Financial Sector Technology and Innovation Grant Scheme (FSTI 3.0) to support financial institutions in building capabilities in quantum and AI.
MAS has also taken a hands-on role in quantum experimentation, leading a consortium including HSBC, DBS, OCBC, UOB, SPTel and SpeQtral to trial quantum key distribution (QKD) in sandbox environments.
These initiatives point to Singapore steadily building the foundations of a quantum-resilient financial ecosystem, enabled by tight collaboration between financial institutions, regulators, and research institutions such as the Centre for Quantum Technologies.
The country’s proactive regulatory stance, depth in scientific research, and tightly connected financial ecosystem create ideal conditions for real-world experimentation.
A layered approach to cybersecurity: the role of QKD and post-quantum cryptography (PQC)
As quantum computing evolves, cybersecurity preparedness will be a strategic priority for financial institutions. Two key approaches – PQC and QKD – are emerging as complementary tools in the shift to quantum-safe infrastructure.
PQC involves developing new mathematical algorithms that are resistant to quantum attacks. These can be integrated into existing digital systems and scaled across global networks, making them a practical and near-term solution. Organisations such as the National Institute of Standards and Technology are leading efforts to develop and standardise these algorithms.
On the other hand, QKD offers a physics-based layer of defence. It uses the principles of quantum mechanics to secure the exchange of encryption keys, where any attempts to intercept or tamper with the keys can be immediately detected.
While QKD networks may not be suitable for all environments due to cost and scalability, they hold significant value in high-risk scenarios, such as inter-bank communications and the transmission of sensitive client data.
For banks such as HSBC, we see value in both. When applied appropriately, PQC and QKD form a layered security approach that enhances long-term resilience – one based on both algorithmic strength and physical principles.
In August 2024, MAS and its industry consortium, including HSBC, signed a memorandum of understanding to jointly conduct real-world QKD trials to evaluate its viability in financial settings.
The findings from these trials, which have since concluded, suggest that QKD may be selectively integrated into existing infrastructure, with broader implementation to be determined as the technology and demand evolve.
Before diving into deployment, however, financial institutions must first understand their existing infrastructure and plan their transition to quantum-safe alternatives accordingly. This includes inventorising digital assets, raising internal awareness, and upskilling relevant teams. As MAS highlighted in its February 2024 advisory, the goal is to achieve crypto-agility, which is the ability to adapt encryption systems smoothly as new threats and technologies emerge.
This transition will be complex, long term, and resource intensive. But given the stakes, beginning preparations early, rather than adopting a wait-and-see approach, is crucial.
Institutions that start investing in such innovations today will be better positioned to navigate tomorrow’s cybersecurity landscape.
From experimentation to real-world resilience
Some global banks, including HSBC, are beginning to align technology roadmaps with this emerging paradigm. HSBC, for instance, recently launched a dedicated Quantum Centre of Excellence in Singapore, its second globally after the UK.
It is designed to support Singapore’s growth in quantum technology and solidify its position as a gateway to Asia’s quantum future. It reflects our strategy to focus on both innovation (“offence”) and cybersecurity (“defence”), helping us plan for the quantum transition while exploring quantum’s broader potential.
Through the centre, we are exploring use cases such as quantum-enhanced fraud detection and portfolio optimisation – areas where quantum computing’s strengths in pattern recognition and modelling complexity could make a tangible difference.
Collaboration with universities, fintechs, and government partners will be key to turning these pilots into scalable solutions, and we are committed to supporting this growth alongside the broader Singapore ecosystem.
Three imperatives for quantum readiness
As financial institutions prepare for this shift, three priorities are emerging:
- Modernisation of cybersecurity standards: Quantum computing poses a real threat to today’s encryption standards. Financial institutions need to begin transitioning to quantum-resilient security, from building cryptographic inventories to piloting post-quantum encryption methods. These are long-term shifts that must begin now to ensure data protection and security later.
- Application of quantum-driven innovation: While we wait for scalable quantum hardware, quantum-inspired methods are already being used to improve optimisation, simulations, and analytics. These applications can enhance areas such as fraud detection and portfolio modelling, delivering real commercial benefits today while paving the way for future adoption.
- Deepening ecosystem collaboration: No single institution can navigate the quantum shift alone. Close collaboration between banks, regulators, researchers, and technology partners is essential to test solutions, develop shared standards, and ensure that the broader financial system remains secure and future-ready.
Equally critical is the development of talent. Attracting and growing quantum expertise in Singapore will require not just deep technical capabilities, but also individuals who can bridge the gap between science and business strategy.
Upskilling the workforce and creating meaningful career pathways in quantum should be treated as a national imperative, essential to sustaining long-term innovation and competitiveness.
A blueprint for the future
As Singapore marks SG60, it is a moment to reflect on our journey – not just as a financial centre, but as a nation shaped by innovation and resilience.
In the 1800s, financial transactions in the city-state were handwritten in bound ledgers, conducted in physical branches and trading houses. Cross-border settlements could take weeks, and credit worthiness was assessed more by relationships than real-time data.
Fast-forward to today, and Singapore is at the leading edge of real-time payments, AI-powered insights, and integrated customer platforms. This is a transformation that mirrors the nation’s evolution into a digital-first, globally connected economy.
The migration to quantum safety is an opportunity to develop novel technologies and enhance long-term cybersecurity resilience. Governments and investors alike are paying attention as the global race for quantum leadership accelerates, and Singapore’s coordinated public-private approach offers a blueprint.
By positioning quantum as an enabler of not only security, but also productivity, resilience, and trust, the country can capture first-mover advantages across industries.
The financial sector will be among the first to experience these gains. But only if we begin the foundational work now: securing systems, aligning talent, and scaling the ecosystem through collaboration.
What does success look like? Not simply early adoption of quantum tools, but the development of an adaptive, trusted, and scalable quantum ecosystem; one that safeguards sensitive information, enables new business models, and reinforces Singapore’s reputation as a secure and forward-looking financial hub.
Just as Singapore has helped define the future of digital banking and cross-border payments, it now has the opportunity to lead again – this time, in quantum-powered finance.
To do so, we must treat this as more than a mere technology trend; it is a strategic inflection point, one that will shape the foundations of trust and performance in financial services over the next decade.
Quantum computing is no longer a thought experiment but a defining force for the next decade of financial innovation, and Singapore has everything it needs to lead it.
The writer is chief operating officer, HSBC Singapore
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