Innovators file FinTech patents for protecting new financial products and services that provide benefits to consumers using technology tools.
Financial Technology is a technology or innovation aimed at competing with traditional financial methods in the delivery of financial services. It is a successful industry that utilizes technology to improve financial activities. The utilization of smartphones for investing, borrowing services, mobile banking, and cryptocurrency are great an example of technologies making financial services more accessible to the public.
As Fintech is rapidly becoming the new normal in the world’s financial arena there is no doubt this technology is an asset and like any other asset, it needs to be protected and hence patenting it becomes important. A patent is a type of intellectual property that gives legal rights to its owner to exclude others from making, using, selling, and importing an invention for a limited period of years, in exchange, for publishing for setting up public disclosure of the invention.
Here are six major Fintech patents which large companies are aiming at:
Amazon’s palm-print payments
Amazon is experimenting with palm-print hand wave transactions. It is putting its resources behind another work-in-progress technology for which traditional retailers must invest in just to keep pace with. Amazon is focusing on developing biometric scanners for linking handprints to credit cards which allow shoppers to buy with the swipe of their palm. Amazon is also giving facilities to shoppers at its Amazon Go grocery store, payments for items without the help of the checkout process by downloading the Amazon Go app. The key element they are eyeing at patenting is the handprint supporting point of sales systems that would produce data of shopping and payment and would feed Amazon’s cloud.
Square’s real-time transfers
Square’s new U.S. patent includes the whole system that allows real-time transfers between that parties who are using two different assets. Earlier, Square’s merchants have shown interest in cryptocurrency payments. If this concept is accepted by merchants, it could continue along with other Square services to assist use cases those include cryptocurrencies, e-commerce, small businesses, cross border payments, and broader financial services.
Walmart’s crypto coin
Walmart filed a patent application for digital currency in the last year, for example, Facebook’s Libra -a stable coin which is backed by the traditional currencies. The patent is a hypothetical “currency market” which defined as an unattended retail environment that helps consumers to purchase products from coolers, freezers, and utilize a self-checkout kiosk for payment for their products.
Bank of America’s blockchain-based wallet
Bank of America is the most important investment bank in the United States of America, and this bank has filed a patent for a digital currency wallet with various layers of asset access. According to patent documents, this wallet can accept different passwords for different amounts of funds requested. The blockchain-based platform should operate within a peer-to-peer network, and it provides unique security to its customers.
More blockchain patents
In the year 2018, JP Morgan Chase filed a patent application for blockchain-supported transfers by using distributed ledgers to drift funds between banks similar to a P2P network. According to the bank, this allows a settlement to happen faster and at less expense. This is the largest financial firm to file for a patent on emerging payments technology.
PayPal’s augmented reality glasses
In the year 2018, PayPal discarded the idea of conducting commerce augmented reality glasses, and this is a concept that occurred five years earlier. As we know that Apple is a high technical giant, and soon it is planning to release its products, PayPal is trying to put its patents to utilize payment-enabled glasses sooner than later.
Financial investment and trading understood as comprising of two groups. The first group consists of retail investment and trading of public companies, which is conducted by the general public or exchanges through brokers and dealers. The second group consists of institutional investment and trading, which involves large financial institutions that can buy and sell publicly listed securities between each other.
In the meantime, the investment into private companies has been the remit of specialized investors, such as venture capital and private equity funds, with so-called exit or liquidity events being an initial public offering or trade sale of the business.
The venture capital firms on Sand Hill Road in Menlo Park, California, were likely instrumental in investing and growing what become known as Silicon Valley. Including their successes, in hardware which being turned into software and the internet that gave rise to the dot com boom. One massive development at that time was when online brokerage firm E*Trade was able to get allocations to some of the hot tech IPOs. Electric banking also started expanding as major banks extended services to customers who were increasingly coming online with the lowering costs and increasing ease of access.
At the same time, institutional trading expanded dramatically, with alternative trading systems and dark pools allowing financial institutions to trade large blocks of securities at one time to minimize pricing impact. At the same time, proprietary trading at desks invested and develops automated algorithms trading programs, as well as high-frequency trading programs that use computational power to devise trading strategies and automate trading in ways no human could.
In the year 2007, the global financial crisis changed the landscape dramatically. After the bursting of the subprime mortgage bubble and the rapid devaluation of financial instruments, such as mortgage-backed securities and credit default swaps, many major financial institutions collapsed or needed to be bailed out by their governments. Lending then dried up by many traditional lenders, and many governments sought to encourage the emergence of new players and business models that provided alternative finance to individuals and businesses.
At the same time, 2010’s flash crash saw the Dow Jones Index drop nine per cent within minutes and was subsequently attributed to high-frequency traders initialling, spoofing algorithms that placed thousands of orders intending to cancel them. The automated shutting down of many automated computerized traders due to the extreme drop also led to a rapid loss of liquidity.
In the European Union, challenger banks were encouraged and have culminated in open banking policies such as the payment services directive, which forces banks to produce customer data to make it easier for customers to make switch financial providers. Some of the banks were also virtual banks, with no branches at all. In the United States, a stark reminder that it was not business, as usual, can be seen in the before and after pictures of USB’s famed trading floor in Stanford, Connecticut. It was once the largest in the world, having 5,000 stock, bonds, and currency traders.
The global financial crisis resulted, amongst other things, in the passing of Dodd- Frank, which prohibited proprietary trading by banks, and the Jump-Start Our Business Startups Act, or Jobs Act in 2012, which legitimized the concept of equity crowdfunding in law. The era of distributed peer-to-peer models of finance was born.
