Additional funding under FSTI 3.0 targets quantum-resilient encryption and AI-driven risk management for financial institutions in Singapore.

The Monetary Authority of Singapore on 18 July 2024 committed an additional S$100 million under the Financial Sector Technology and Innovation Grant Scheme (FSTI 3.0) to support financial institutions in building quantum and artificial intelligence capabilities, with co-funding up to 30% for post-quantum cryptography pilots and up to 50% for industry-wide quantum solutions. This allocation brings total FSTI 3.0 funding to S$250 million, reflecting a deliberate pivot toward two technologies that the regulator considers critical to the sector’s long-term resilience and competitiveness.

The S$100 Million Commitment: Scope and Structure

The additional S$100 million is ring-fenced exclusively for quantum and AI technologies, distinct from the six existing tracks under FSTI 3.0 that were launched in 2022. That initial phase committed S$150 million across six areas: Centre of Excellence (COE), Industry-Wide Projects, Innovation Acceleration, AIDA (Artificial Intelligence and Data), RegTech, and ESG FinTech. The new funds are not a general top-up but a targeted injection into two high-priority domains, effectively establishing a dedicated quantum track and enhancing the existing AI and data grant scheme within the FSTI 3.0 framework.

The structure reflects a phased approach. Since FSTI 3.0 was introduced by then Deputy Prime Minister Lawrence Wong at the Singapore FinTech Festival in 2022, the programme has focused on accelerating innovation through cutting-edge projects with a regional nexus. The 2024 augmentation signals that MAS considers quantum computing’s cybersecurity implications and AI’s risk-management potential as sufficiently urgent to warrant a separate allocation. As MAS Managing Director Chia Der Jiun stated at a media conference on 18 July, “We have to start building capabilities in the financial industry to be quantum-resilient.”

S$ millionSource: Orionmano Industries

Quantum Track: Securing the Financial Sector for the Quantum Era

The quantum track under FSTI 3.0 is structured around three sub-grants: Technology Centres, Technology Innovation, and Security. Each targets a distinct stage of capability building within financial institutions.

The Security grant offers co-funding of up to 30% for pilots involving post-quantum cryptography and quantum key distribution. This substream is designed to enhance cybersecurity readiness as the industry prepares for a future in which quantum computers could break current encryption standards. MAS has identified this as a priority due to the long lead time required to migrate financial infrastructure to quantum-safe cryptographic algorithms.

The Technology Innovation grant provides up to 50% co-funding for industry-wide quantum solutions. It comprises two sub-tracks: one focused on boosting institutional use cases, and another designed to solve relevant industry-wide problems with quantum solutions. This higher co-funding rate reflects MAS’s intent to de-risk collaborative, cross-institution projects that can demonstrate quantum advantages in areas such as portfolio optimisation, fraud detection, and risk simulation.

The Technology Centres grant supports financial institutions in building quantum computing and security innovation infrastructure in Singapore. This includes physical facilities for experimentation, testbeds for quantum algorithms, and shared computing resources that smaller institutions would otherwise struggle to access. Taken together, the three grants constitute a coordinated push to develop quantum capabilities from foundational infrastructure through to production-ready applications.

AI Track: Anchoring Innovation Centres for Model Development and Risk Management

MAS is enhancing the existing AI and data grant scheme under FSTI 3.0 to support financial institutions in establishing AI innovation centres in Singapore. These centres are expected to cover the full lifecycle of AI model development: building and training, deployment for high-impact use cases, governance and risk management, and testing and monitoring.

The emphasis on governance and risk management is notable. As financial institutions deploy AI models for credit underwriting, anti-money laundering, market surveillance, and customer engagement, the ability to monitor model behaviour, detect drift, and ensure compliance with emerging AI regulations becomes a competitive differentiator. MAS has indicated that Singapore has the potential to become a centre of excellence for anchoring AI capabilities, including the development of applications and the testing and deployment of AI solutions for the financial sector.

The AI track explicitly targets high-impact use cases, rather than experimental projects. This suggests MAS expects funded institutions to demonstrate measurable outcomes—reduced false-positive rates in transaction monitoring, improved accuracy in risk pricing, or faster model validation cycles. The funding structure also implies that AI innovation centres should serve as training grounds for the broader financial ecosystem, with lessons learned intended to transfer to smaller financial institutions lacking in-house AI expertise.

Talent and Ecosystem Development

MAS will work with Institutes of Higher Learning (IHLs) and the Institute of Banking and Finance (IBF) on talent development initiatives to support both quantum and AI capabilities in the financial services sector. This workforce component is critical to the programme’s scalability: even generous co-funding will yield limited results if institutions cannot recruit or train staff competent in post-quantum cryptography, quantum key distribution, or AI risk-model governance.

The collaboration with IHLs aims to embed quantum and AI curricula into finance-related programmes, while IBF’s role involves upskilling existing banking professionals through certification courses and workshops. MAS has not specified the quantum track’s grant quantum for talent development, but the regulator’s statement that it will support “building quantum capabilities in the financial services sector” implies that training costs are eligible under the Technology Centres or Technology Innovation grants.

Outlook

As financial institutions begin to apply for grants under the new quantum and AI tracks, the success of FSTI 3.0 will hinge on the speed of talent development and the practical deployment of post-quantum cryptography and AI governance frameworks across Singapore's financial sector. The S$250 million programme represents a substantial public commitment, but adoption will require institutions to navigate a complex landscape of rapidly evolving encryption standards, auditability requirements for AI models, and cross-border data considerations. MAS’s deliberate separation of quantum and AI funding allows for dedicated focus, but the ultimate value of FSTI 3.0 will be measured by the number of quantum-safe production systems and AI governance frameworks that move from pilot to permanent deployment in the coming years.