Auxiliary activities, including payment service providers, underpin steady expansion amid digitalisation and regulatory support.

Sector Growth Trajectory: 4.0% CAGR Through 2029

Singapore's financial services sector is projected to maintain a 4.0% CAGR from 2024 to 2029, building on a 6.8% growth in 2024 that doubled the prior year's rate, driven by digital banking and fintech innovation. The Monetary Authority of Singapore (MAS), through data cited by Market Research Singapore and FPA Financial, expects the financial services sector to grow at a compound annual rate of 4.0% over the 2024–2029 period, underscoring sustained expansion potential despite cyclical headwinds.

In 2024, the sector grew 6.8%, more than double the 3.1% recorded in 2023, and accounted for approximately 14% of Singapore's gross domestic product, according to the MAS Annual Report released in July 2025 and reported by The Straits Times. The sector's average growth rate from 2021 to 2024 stood at 4.7%, keeping it firmly on track to meet the Industry Transformation Map (ITM) 2025 target of 4% to 5% annual growth over 2021 to 2025, MAS managing director Chia Der Jiun said at a media conference.

Growth Rate (%)Source: Orionmano Industries

Auxiliary Activities and Payment Service Providers Expand Steadily

The auxiliary activities segment, which largely comprises payment service providers, is expected to expand at a steady pace, supported by firm regional consumption and stable payments activity, according to FPA Financial's February 2026 market report. This segment contributed to the broad-based growth the sector recorded in 2024, which spanned banking, fund management, insurance, and activities auxiliary to financial services, Deputy Prime Minister and MAS chairman Gan Kim Yong noted in the central bank's annual report.

Embedded finance—a closely related subsector that integrates financial services within non-financial platforms—is projected to grow 33.5% in 2024 to reach US$2.70 billion, according to ResearchAndMarkets. The embedded finance industry in Singapore is forecast to record a CAGR of 23.8% from 2024 to 2029, with revenues increasing to US$7.85 billion by 2029. This rapid expansion reflects the structural shift toward seamless, platform-based financial products including payments, lending, and insurance, and positions Singapore as a regional leader in embedded finance, supported by its strong financial infrastructure and focus on innovation.

Structural Drivers: Digitalisation, AI, and Regulatory Support

Beyond cyclical factors, several structural forces are strengthening Singapore's role as a global financial hub. Digitalisation and the growing adoption of artificial intelligence tools are enhancing the sector's capabilities, FPA Financial notes. These technologies are being deployed across banking, wealth management, and compliance functions, improving operational efficiency and customer experience.

A low-interest-rate environment, driven by expectations that the U.S. Federal Reserve will hold rates steady, should encourage borrowing and sustain loan demand, particularly in early 2026, according to FPA Financial. MAS anticipates that loan growth will stay resilient in the first part of 2026 before moderating later in the year, reflecting a more cautious economic outlook.

Singapore's supportive regulatory environment remains a key competitive advantage. The MAS has pursued a consistent strategy of fostering innovation while maintaining financial stability, enabling the growth of digital banking and fintech. This regulatory approach, combined with a tech-savvy population and a booming digital commerce sector, has created conditions for the rapid scaling of embedded finance and digital payment services, as ResearchAndMarkets highlights.

The sector's medium-term growth will hinge on sustaining digital transformation and navigating global trade risks, with the 4.0% CAGR providing a baseline for strategic planning. Singapore's ability to attract and retain financial talent, maintain its status as a wealth management hub, and deepen its capital markets will determine whether the sector can sustain growth above the projected baseline.

Risk Factors and Medium-Term Outlook

MAS has warned that the pace of growth seen over the past few years is unlikely to persist, as the industry braces for slower global growth amid tariff uncertainties, The Straits Times reported. The central bank's caution reflects downside risks from ongoing trade tensions and potential disruptions to global supply chains, which could dampen demand for financial services in the region.

Loan growth is projected to stay resilient in the early part of 2026 before moderating later in the year, a trajectory that aligns with expectations of a more cautious economic outlook, FPA Financial states. The broader financial services sector, however, benefits from diversification across banking, asset management, insurance, and fintech, which provides some insulation against sector-specific downturns.

The 4.0% CAGR over 2024–2029 highlights sustained expansion potential despite cyclical headwinds. While below the 4.7% average growth rate achieved from 2021 to 2024, this medium-term projection accounts for a normalization of growth as the sector matures and external conditions become less supportive. For context, assets under management in Singapore grew 12.2% year-on-year to S$6.07 trillion in 2024, marking the first time AUM exceeded S$6 trillion, while net inflows grew 50% from 2023 levels, indicating strong continued demand for Singapore's wealth management services.

In summary, the 4.0% CAGR forecast provides a realistic baseline for the financial services sector through 2029. The steady expansion of auxiliary activities, particularly payment service providers, and the rapid growth of embedded finance are key structural supports. However, the pace of digital transformation, the trajectory of global trade policy, and the interest rate environment will collectively determine whether actual growth settles at, above, or below this projection.