Banking and insurance intermediation drive the majority of the sector's gross value added, reinforcing Singapore's role as a global financial hub.

Midstream intermediation services—comprising banking, insurance, and capital market activities—account for approximately 60% of Singapore's finance and insurance sector gross value added (GVA), according to industry estimates. This structural dominance underscores the centrality of traditional financial intermediation to Singapore's economy, with implications for policymakers evaluating sector resilience and for investors assessing exposure to the city-state's financial ecosystem. The finance and insurance sector constitutes a significant component of Singapore's modern services cluster, which also includes information and communications and professional services, and which collectively exports roughly 45% of its output.

The Dominance of Midstream Intermediation

The 60% share attributed to midstream intermediation reflects the combined output of banking, insurance, and capital market services—the core functions that connect capital suppliers with end-users. Banking encompasses deposit-taking institutions (full banks, wholesale banks, merchant banks, and finance companies), corporate and investment banking, wealth management, private banking, and treasury activities. Insurance covers life insurance, general insurance, reinsurance, captives, and intermediaries. Capital market services include securities dealing, futures and derivatives trading, corporate finance advisory, fund management, REIT management, custodial services, and credit rating agencies.

This intermediation layer is the engine room of Singapore's financial sector. The remaining 40% of sector GVA is distributed across other financial services, including financial advisory, payments, and ancillary support activities. The concentration in intermediation reflects Singapore's historical development as a hub that facilitates cross-border capital flows rather than serving primarily domestic demand.

%Source: Orionmano Industries

Recent Growth and Segment Performance

The finance and insurance sector expanded by 4.3% in 2025, moderating from 7.3% growth in 2024, according to the Monetary Authority of Singapore (MAS). Growth was driven mainly by the banking and insurance segments, supported by sustained credit intermediation under accommodative financial conditions and robust performance in life insurance. In contrast, the fund management segment saw more subdued activity, reflecting weaker global market conditions.

The moderation from the 7.3% pace in 2024 is consistent with a normalisation of activity following a period of elevated credit demand and insurance uptake. Accommodative financial conditions—characterised by a low-interest-rate environment—have supported continued lending and borrowing activity through the banking system. Life insurance has performed robustly, buoyed by demand for savings and protection products amid ongoing economic uncertainty.

The relative weakness in fund management activity highlights the sensitivity of this segment to global market performance. With equity and fixed-income markets under pressure in parts of 2025, client risk appetite and asset valuations both faced headwinds, dampening fee income and asset growth for fund managers.

Singapore's Global Financial Hub Status

The dominance of intermediation services is both a cause and consequence of Singapore's position as a global financial centre. The country is home to over 1,200 financial institutions offering diverse products across asset classes. Its foreign exchange market is ranked third largest globally by turnover. The banking sector alone provides sophisticated services including corporate and investment banking, wealth management, and treasury operations, supported by deep and liquid capital markets that facilitate financial intermediation within Asia.

Singapore's international orientation is striking: 77% of assets under management (AUM) are sourced from outside Singapore, and 89% of total AUM is invested overseas. This means the vast majority of financial activity flowing through Singapore originates from and is destined for foreign markets—a pure intermediation model that distinguishes Singapore from domestic-focused financial centres.

The government has invested substantially to maintain and enhance this position. The Financial Services Industry Transformation Map achieved 5.7% annual value-added growth from 2016 to 2020, exceeding the 4.3% target. The government has committed an additional S$2 billion injection into the Financial Sector Development Fund to support continued competitiveness.

Outlook

With accommodative macroeconomic and financial conditions expected to persist in 2026, the banking and insurance intermediation segments are well positioned to maintain their dominant share of sector GVA. MAS expects the finance and insurance sector to remain supported by broadly accommodative conditions. Continued government investment in the Financial Sector Development Fund, including the S$2 billion injection, should support innovation, skills upgrading, and technology adoption across the sector.

The fund management segment may recover if global markets improve, potentially shifting the composition of sector output modestly. However, given the structural scale of banking and insurance intermediation, even a meaningful recovery in fund management is unlikely to displace intermediation from its dominant position in the near term. For policymakers and investors, the key takeaway remains that Singapore's financial sector GVA is fundamentally a story of intermediation—and that story shows no signs of changing in 2026.