Singapore faces up to quantum cyber risk

The Monetary Authority of Singapore (MAS), leading financial services firms DBS, HSBC, OCBC and UOB plus technology firms SPTel and SpeQtral have signed a Memorandum of Understanding (MoU) to collaborate and rise to the challenge of “major cybersecurity” risks presented by quantum computing.

The MAS said that it would embark on quantum security collaboration and study the application of Quantum Key Distribution (QKD) in financial services. QKD can help financial institutions (FIs) protect the exchange of cryptographic keys to address the cybersecurity threats posed by quantum computing.

“Quantum computing technology has been developing rapidly and has demonstrated potential to break commonly used cryptography and encryption algorithms. This poses a major cybersecurity concern,” said the MAS.

In February of this year, MAS issued an advisory to all FIs on the cybersecurity risks associated with quantum technology, and provided recommendations for FIs to safeguard themselves against the identified threats, including to carry out proof-of-concept trials with quantum security solutions.

More recently, MAS launched a quantum track under the Financial Sector Technology and Innovation Grant Scheme (FSTI 3.0) to provide funding support for quantum projects and capabilities.

The MAS said that this MoU builds on these initiatives and will provide a collaborative framework for trialling the application of quantum security solutions in financial services.

In the coming months, MAS and participating banks will experiment with QKD solutions jointly provided by SPTel and SpeQtral in the following areas:

• Conduct QKD proof-of-concept sandbox on financial sector use cases to evaluate its viability, effectiveness and applicability to financial services, and determine the feasibility of using QKD for quantum-safe communications within the financial sector;
• Validate the security properties of QKD, such as detecting eavesdropping attempts and preventing unauthorised access or tampering of QKD transmissions. It is hoped that this will help to verify QKD’s capability to provide robust security for sensitive data transfers, and enhance trust in its deployment within the sector; and,
• Enhance technical competencies through knowledge exchange to equip MoU participants with the skillsets needed to support the transition towards adopting quantum security solutions when they are commercially available.

Vincent Loy, assistant managing director (technology), MAS, said: “As quantum technology advances, it is vital for the financial sector to safeguard against potential cybersecurity threats that may be brought about by the technology. The proof-of-concept trials will help MAS and financial institutions better understand QKD’s potential impact on operations and address challenges early. These technology trials can also inform and shape technology and cyber risk management policies towards quantum-proofing our financial systems.”

Eugene Huang, group chief information officer, DBS, said: “While DBS has been familiarising ourselves with quantum computing’s potential to transform financial services, we are keenly aware of the dangers this fast-developing technology can bring. Today’s MoU represents a significant step forward in safeguarding Singapore’s financial sector against looming cybersecurity risks associated with quantum, and underscores DBS’s own commitment to leveraging innovation to ensure that banking services remain safe, secure, and resilient. In particular, by participating in the development of QKD use cases, we are not only enhancing our defences but also setting new standards for futureproofing our financial systems against bad actors seeking to exploit encryption technology.”

Tancy Tan, chief operating officer, HSBC Singapore, added: “Singapore is demonstrating once more to be forward thinking in the exploration and testing of cutting-edge technologies, bolstering the nation’s reputation as a secure and stable financial hub. HSBC is pleased to join forces with MAS and other collaborators in the banking and technology sectors to trial QKD in Singapore, a key technology in fortifying the financial industry against emerging cyberattacks.”