MAS flags major AI, quantum computing risks to financial institutions; forms task force to prepare defences
The central bank will also issue a set of “supervisory expectations” for quantum resilience later this year.
Buildings in the central business district in Singapore on Nov 16, 2022. (File photo: CNA/Hanidah Amin)
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SINGAPORE: As artificial intelligence and quantum computing create new cybersecurity and scam risks for the financial sector, the Monetary Authority of Singapore (MAS) has launched a task force to strengthen cyber defences and tackle AI-driven threats.
The task force, which is jointly established with the Association of Banks in Singapore (ABS), will focus on enhancing financial institutions’ expertise in the use of AI in cybersecurity, MAS said on Tuesday (Jul 28).
It will also conduct trials on advanced tools and develop industry guidance on new response measures to AI-driven threats, said MAS managing director Chia Der Jiun during a press conference on the central bank’s financial performance.
Aside from AI, Mr Chia also cited the significant risks to data security and communications by financial institutions in the medium term by quantum computing technology, which is still at an early stage of development.
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To this end, the central bank will issue a set of “supervisory expectations” for quantum resilience later this year, setting out progressive timelines for financial institutions to address quantum resilience concerns.
“Our aim is for (financial institutions) to achieve quantum resilience before the end of this decade,” he said.
NEWER THREATS AND CHALLENGES
ABS and MAS said in a joint media release that the establishment of the AI-driven Cyber and Technology Risk Taskforce (ACT), which has been bringing members together since May this year, was in response to the emerging risks posed by frontier AI models.
The task force will comprise MAS and senior technology and cyber leaders from financial institutions, including DBS, OCBC, UOB, the Singapore Exchange, NETS, as well as the Banking Computer Services.
MAS and ABS said the task force will facilitate industry sharing of AI cybersecurity use cases and experience, as well as to boost cyber defence knowledge. It will also strengthen the cyber security posture or financial institutions.
“AI is reshaping the cyber threat landscape, and the financial sector must continue to move together to stay resilient,” said ABS director Ong-Ang Ai Boon.
The sector remains vigilant, agile and committed to strengthening resilience, she added.
For AI-enabled scams, phishing can be more personalised and persuasive “at scale”, said Mr Chia. Frictions to digital banking transactions remain useful to frustrate scammers, but banks must harness AI and strengthen their controls to better defend against more sophisticated tactics, he said.
MAS will review the banks’ efforts to enhance the effectiveness of their fraud detection models, including how well they use AI, he said.
The central bank is also working with GovTech, the police and five banks to test whether AI models trained on cross-bank and public-private data can improve overall detection of scam transactions. The findings are expected to be ready next year.
Mr Chia also said financial institutions’ cyber defences are threatened by frontier AI models that can find and exploit system vulnerabilities.
Frontier AI models reveal more vulnerability findings and shorten discovery-to-exploit timelines, he said. “Together, these significantly compress the timelines for patching, testing and remediation.”
In April, MAS issued an advisory calling on financial institutions to strengthen their cyber defences, and also introduced a requirement in July for key financial institutions to conduct AI-assisted “red teaming” on critical internet-facing systems. That means they need to use advanced AI models to identify potential attack paths.
The requirements will soon be stepped up further, and MAS will issue supervisory expectations for key financial institutions to develop and submit comprehensive assessments and action plans to strengthen defence against AI-enabled cyber threats.
These will address the financial institutions’ ability to detect and patch vulnerabilities at scale, test system changes before implementation, and back up, restore and recover critical systems and services when disruptions occur.
QUANTUM COMPUTING RISKS
Quantum computing also poses “significant risks” to the security of data and communications used by financial institutions in the medium term, said Mr Chia.
Noting that experts have given a five to 10 year estimated timeframe for when quantum computing could break existing encryption techniques, he said the transition to quantum-safe practices will take time.
“It is certainly not too early to make serious preparations,” he said.
On the supervisory expectations, which are to be issued later this year, Mr Chia said MAS will set progressive timelines for financial institutions to establish an inventory of their cryptographic assets, develop a prioritisation of the migration of vulnerable assets to quantum-resilient solutions, and build technical capabilities and governance frameworks to support a quantum-safe migration.
Over the past few years, MAS had begun laying the groundwork for a quantum-safe financial sector, such as an advisory in 2024 to financial institutions to consider transition measures as well as conducting technical work on cryptography solutions with industry and international counterparts, he said.
Apart from that, Mr Chia said Singapore has introduced significant measures and achieved meaningful progress in enhancing the resilience of digital financial services against scams, operational disruptions and cybersecurity threats.
For example, banks introduced a “money lock” feature, which sets aside funds that cannot be transferred digitally. As of May 2026, the amount of money protected under this feature hit S$47 billion, nearly double from a year ago.
Singapore reported a decrease in scam cases and loss amounts in 2025.
MAS has also been working with financial institutions to increase the effectiveness of their risk management frameworks, and has enhanced the resilience of retail payments.
Since August last year, contactless NETS debit payments can continue up to a certain limit in the event of a bank system disruption. MAS is also engaging major banks to introduce capabilities that allow payments and fund transfers to continue during a system disruption.
Source: CNA/an(nj)
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