A new Nottingham Business School (NBS) study reveals that the US is leading the fintech innovation field when it comes to the quality and quantity of patent applications. The news comes alongside the creation of a new index to help companies measure the quality of fintech patents – for making decisions on investments which involve intellectual property (IP).
Research led by the new Centre for Finance, Technology and Society at Nottingham Trent University‘s Nottingham Business School (NBS), used key indicators to assess more than 16,000 patents in the fintech field registered over 20 years.
The study mapped out three focus areas for patterns of intellectual property registration and protection:
Distribution of fintech patent quality based on different jurisdictions
Distribution of patent quality in relation to specific technical fields (IPCs)
Whether there is a correlation between the average fintech patent quality of firms and their earnings
The US leads the way
The NBS findings highlight that the US is the leading jurisdiction for both the number of registered patents and patent quality. The country accounted for 39.5 per cent of the sample, followed by China (15.5 per cent), Korea (12.2 per cent), Japan (7.8 per cent), and Europe (7.1 per cent).
The study also found a significant increase in the rate and quality of registered patents in the US between 2016 and 2020. It also saw a significant increase in claims counts in the likes of South Korea, demonstrating the growth of the region’s fintech sector.
The NBS research considered several key categories:
e-shopping or e-commerce
Verifying the identity or authority of a user of the system
Identification of payer or payee
Payment protocols
Electronic wallets
While the US had the most patents in the categories, Europe and Japan had the fewest number. The US led in all categories – barring electronic wallets. In this category, there was no notable difference between jurisdictions.
A new fintech patent index
NBS has created a new Fintech Patent Quality Index (FPQI) to support the development and deployment of new financial technologies.
Furthermore, the FPQI could also potentially be used to guide assessments of the quality and value of an organisation’s IP assets and potential in a merger or acquisition situation. The index could also be used to identify high-quality patents that may be targeted for alliances, takeovers, or investments.
The creation of the FPQI will also enable policymakers and regulators to better understand their jurisdiction’s standing in terms of patenting within fintech.
Milad Armani Dehghani, lead researcher and senior research fellow at the Centre for Finance, Technology and Society
Dr Milad Dehghani, lead researcher and senior research fellow at the Centre for Finance, Technology and Society at NBS, commented on the creation of the FPQI. Dr Dehghani said: “Patents in the fintech sector are being awarded at an accelerating pace; however, due to the early stage of technology progress in some fintech fields, patents may be linked to indefensible claims and capital raising rather than legitimate technical or business purposes.
“So, as the fintech sector evolves, the valuation of organisations with fintech activities and IP strategies will likely become more critical. Organisations and investors will require practical approaches to valuing IP and commercial portfolios.
“Having up-to-date insights on high-quality patents as enabled by the FPQI, therefore, represents a significant informational and strategic resource for organisations and managers. It provides them with insights on potential organisations to approach, in either a partnership or user capacity.”
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