HSBC has joined The Monetary Authority of Singapore (MAS) in signing a Memorandum of Understanding (MoU) focused on developing quantum security.

The move will see the two organisations, alongside several other banks and technology firms, study the application of Quantum Key Distribution (QKD) to help address quantum computing cyber threats by protecting the exchange of cryptographic keys.

The central bank has warned that quantum computing poses a "major cybersecurity concern" because not only has the technology been developing rapidly but it also has the potential to break commonly used cryptography and encryption algorithms.

The MoU comes after the MAS issued an advisory to financial institutions on the cyber risk associated with quantum tech. It also called for firms to safeguard themselves by carrying 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 new MoU, also signed by DBS, OCBC, UOB, SPTel, and SpeQtral, aims to build on these existing initiatives and provide a collaborative framework for trialling quantum security solutions in financial services.

Over the next few months, the banks will experiment with QKD solutions jointly provided by SPTel and SpeQtral in conducting a QKD proof-of-concept sandbox on financial sector use cases to evaluate its "viability, effectiveness and applicability to financial services".

The sandbox will also determine the feasibility of using QKD for quantum-safe communications within the financial sector.

The banks will also aim to validate the security properties of QKD, such as detecting eavesdropping attempts and preventing unauthorised access or tampering of QKD transmissions. MAS said this will help to verify QKD’s capability to provide robust security for sensitive data transfers and improve trust in its deployment within the sector.

Additionally, the group is looking to enhance technical competencies through knowledge exchange to equip MoU participants with the skillsets to support the transition towards adopting quantum security solutions when they are commercially available.

“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," said Vincent Loy, assistant managing director (technology) MAS. "The proof-of-concept trials will help MAS and financial institutions better understand QKD’s potential impact on operations and address challenges early."

He went on to say that the technology trials could also inform and shape technology and cyber risk management policies towards quantum-proofing financial systems.

National Technology News has approached HSBC for comment on the plans.

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