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a new Nottingham Business School (NBS) reveals that the US leads the field in fintech innovation 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, to make investment decisions involving intellectual property (IP).

Research led by the new Center for Finance, Technology and Society in Nottingham Trent UniversityNottingham Business School (NBS) in Nottingham used key indicators to assess more than 16,000 fintech patents filed over 20 years.

The study outlined three areas of focus for patterns of registration and protection of intellectual property:

• Distribution of the quality of fintech patents according to the different jurisdictions
• Distribution of patent quality in relation to specific technical fields (IPC)
• Whether there is a correlation between the average quality of companies’ fintech patents and their profits

America leads the way

The NBS findings highlight that the US is the leading jurisdiction both in number of patents filed and in patent quality. The country represented 39.5 percent of the sample, followed by China (15.5 percent), Korea (12.2 percent), Japan (7.8 percent), and Europe (7.1 percent). .

The study also found a significant increase in the rate and quality of US patent filings between 2016 and 2020. It also saw a significant increase in the claim count in countries like South Korea, demonstrating the growth of the fintech sector in the region.

The NBS investigation considered several key categories:

• e-shopping or electronic commerce
• Verification of the identity or authority of a system user
• Identification of the payer or beneficiary
• payment protocols
• Electronic wallets

While the US had the most patents in the categories, Europe and Japan had the fewest. The US led in all categories except eWallets. In this category, there were no notable differences 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.

In addition, the FPQI could also potentially be used to guide assessments of the quality and value of an organization’s intellectual property assets and their potential in a merger or acquisition situation. The index could also be used to identify high-quality patents that may be targeted for alliances, acquisitions, or investment.

The creation of the FPQI will also allow legislators and regulators to better understand the position of their jurisdiction in terms of patenting within fintech.

Dr Milad DeghaniPrincipal Investigator and Senior Investigator at the Center for Finance, Technology and Society on NBS, commented on the creation of the FPQI. Dr. Dehghani said: “Patents in the fintech sector are being granted at a fast pace; however, due to the early stage of technological progress in some fintech fields, patents may be tied to indefensible claims and raising capital rather than legitimate technical or business purposes.

“So, as the fintech sector evolves, the valuation of organizations with fintech activities and IP strategies will likely become more critical. Organizations and investors will require practical approaches to value IP and business portfolios.

“Having up-to-date high-quality patent knowledge as enabled by the FPQI therefore represents an important informational and strategic resource for organizations and managers. It provides them with information about possible organizations to approach, either in an association or as a user.”