Understanding the FinTech Landscape

Perhaps when we think of patents, most of the time we think of inventions in the area of engineering, medicine or chemistry. One sector that we don’t associate much with the world of patents is the financial sector. Without the technological advances that have been taking place in this sector, many of the services and products that we use today would not be possible. That is why today I would like to talk to you about the trends in the Financial Technology sector – Fin Tech.

There has been an innovation boom in the last decade, driven by technological trends like the rise of mobile banking, the growing interest in crypto-currency, blockchain, developments in technology to address the complex financial regulatory environment, growing need for greater accuracy for real-time risk decisions and adoption of alternative lending practices. With all this innovation, you might expect patenting activity in this industry would keep to a steady upward trajectory. However, some events have put the brakes on Fintech’s patents.

The technology that drives the financial services industry is closely linked to developments in software and business methods. The Alice v. CLS Bank case, on the subject matter of patent protection that occurred in June 2014, is perhaps one of those events that most affected the industry. The case was widely considered as a decision on software patents and set a precedent as they were considered invalid because the claims were based on an abstract idea and implementing those claims on a computer was not enough to transform that idea into patentable subject matter.

In software patent law, it is not enough that the claimed invention is new, i.e. that it is different from what already exists in the state of the art. But the difference between the claimed invention and the existing state of the art should be significant and essential to the invention. Therefore, it’s less likely for inventors to obtain a patent for a software-related innovation that simply replaces existing technical and physical solutions with the same solutions using software and a computer, as such a replacement would be obvious to an average engineer in the relevant technical field.

As a result of the Alice v. CLS Bank case, there have been fewer FinTech patent applications despite the massive use of bank accounts, credit/debit cards, ubiquitous money transfer systems and the fact that protected innovations in this area offer high economic potential.

The main clusters for granted patents in FinTech are:

  • Trading, for example, in stocks, commodities, derivatives or currencies
  •   Crypto-Currencies
  • Financial Security, e.g. Blockchain
  • Electronic or mobile payments
  • Banking, e.g. interest calculation, credit approval, mortgages, etc.
  • Investments, e.g. financial instruments or portfolio and fund management
  • Insurance, e.g. risk analysis or pensions

Analysing in PatBase Analytics the main (CPC) classifications of patents in the FinTech sector we can gather important and actionable business intelligence. Technology companies as well as banks are leaders in this technology area. Companies such as IBM, Microsoft, Samsung and Sony are among the companies with the most granted patents. Among banks, Bank of America is the only bank which features in the top 10. We can also see other well-known companies in the financial industry such as Diebold Nixdorf, First Data and Visa.

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It’s interesting to see IGT, or International Game Technology, feature so highly in this area as manufacturers of slot machines and other gaming technology. Clicking through to the data back in PatBase shows that the patents featuring here are around payment verification or managing pay outs from gambling machines in a secure way.

Looking at where in the world most patents are granted, it is clearly the United States that is the undisputed leader followed by South Korea, China and Japan. Considering that we’ve already seen 8 out of the 10 top assignees are American companies, this is unsurprising.

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Although it is predominantly US companies who are investing in FinTech innovations, there are also many European and Asian countries featured in this result set. The top featured European companies are:

  •  SAP
  • Omnipol
  • Nokia
  • Accenture
  • Philips

The top featured Asian companies are:

  • Samsung
  • Sony
  • Hitachi
  • LG
  • Renesas

Regardless the high rejection rates for software and business method patents which have decreased the number of patent applications coming from the FinTech industry, there are indications that the USPTO may revise its practice and once again allow valuable innovations to be protected by patents.

The patenting strength of tech companies in FinTech leads us to believe that the future of the financial sector will be impacted by technological advances that will also impact other industries such as healthcare, aerospace, automotive and manufacturing. Artificial intelligence will be possibly the most disruptive technology as well as the IoT (Internet of Things) and Blockchain.

Patent information contains valuable insights and information that can assist companies in identifying new/emerging markets, give insights into the actions of competitors and partners and inform the company which parts of their portfolio are most valuable. In just a few minutes, PatBase and integrated PatBase Analytics V2 can be used to identify key players in the space for licensing agreements or locate expired IP that is open for use. Whether you have a practical problem to solve, valuable IP you wish to keep track of or competitors to monitor, Minesoft’s solutions have you covered.

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