Singapore FIs Show More Caution in Adopting BaaS, AI, and Embedded Finance

Singapore FIs Show More Caution in Adopting BaaS, AI, and Embedded Finance

by November 28, 2023

Singapore’s financial institutions have demonstrated a mix of resilience and cautiousness in adopting new banking technologies amid challenging global economic conditions, according to financial software provider Finastra‘s annual global survey.

The ‘Financial Services: State of the Nation Survey 2023’ indicates a decline in the enthusiasm for emerging banking models, such as Banking as a Service (BaaS) and embedded finance, among Singapore’s finance executives.

While 76% still view these models as opportunities for growth and revenue, this figure has dropped from 87% last year. The actual deployment or improvement of embedded finance capabilities also decreased from 41% in 2022 to 32% this year.

Regarding artificial intelligence (AI), Singapore’s finance executives have become more cautious. Only 30% reported improvements or deployments of AI technology in the past year, a decrease from 41% in 2022.

This trend extends to generative AI, with only 16% of institutions actively rolling out this technology, the lowest globally. A significant 37% are adopting a ‘wait and see’ approach, showing interest but not yet exploring generative AI.

Globally, the economic climate has impacted technology and digital banking investments. In Singapore, 79% of respondents acknowledged constraints on such investments, aligning with the global average of 78%.

However, Singapore leads in recovery prospects, with 24% of institutions having fully resumed their investment plans, the highest among surveyed markets.

The survey also highlights a growing focus on ESG (Environmental, Social, and Governance) and sustainability in the financial sector. In Singapore, 80% believe that ESG focus will be a major disruptor, and 81% see ‘green lending’ as a growth opportunity.

Additionally, 37% plan to use generative AI for ESG data analysis and decision-making.

The survey, conducted by Savanta between August and September 2023, included 956 managerial-level professionals from financial institutions across nine markets, representing a gross turnover of approximately US$33 billion.

Simon Paris

Simon Paris

Finastra’s CEO, Simon Paris said,

“Despite the challenging economic climate, it’s clear from our research that investment in AI, BaaS, and embedded finance remain key priorities for financial services organizations over the next 12 months, particularly as they seek to further enhance and personalise the customer experience.


We share the industry’s ongoing commitment to ESG initiatives, to collaboration around Open Finance, and excitement in using advanced technologies like AI to help deliver on the opportunities ahead.”