Getting updates on your bank account in augmented reality. Credit scores built on blockchain. Payment requests that involve scanning would-be recipients with facial recognition technology.
These are just some of the ideas Canadian banks have been envisioning in public patent filings, which lenders have increasingly made in recent years as banking becomes more and more dependent on technology.
Toronto-Dominion Bank, for example, used to file around one patent application a year. But after ramping up its strategy about five years ago, it now files about 40 to 50 applications annually, according to Josh Death, associate vice president, legal, intellectual property and patentable innovation at TD.
“This is a recent global financial phenomenon,” Death said. “It’s really come out in the past, I would say, decade.”
Patents given companies exclusive rights to make, use and sell their inventions for a limited time, something that could give banks a significant edge as the industry becomes more technologically driven.
TD is developing such “patent currency,” Death said, that could someday be “leveraged in different ways as the business sort of sees fit.”
Examples of what the banks want to patent are showing up in the publicly available filings.
A March 2018 patent assigned to TD Bank in the U.S. was for “systems and methods for providing balance notifications in an augmented reality environment.”
Patent filings can be highly technical, but augmented reality, or AR, generally refers to technology that can superimpose computer-generated images over the real world when it is viewed through smartphones or glasses. TD’s patent said the operations could include presenting information through a device “and within a field-of-view of the user.”
Another TD patent in the U.S., dated Jan. 2018, is for “image recognition-based payment requests” that could include “performing an automated computer-based facial recognition process” to identify one of the parties involved.
Blockchain, the digital and distributed ledger system that is used to track transactions of bitcoin and other cryptocurrencies, appears to be a particular area of interest for the banks.
RBC filed a patent application in September 2017 in the U.S. describing a credit scoring platform that would be built on blockchain. The application, which was published in March of 2018, said credit records would be recorded using the “blocks” of information that make up the blockchain. Those blocks would be linked by data used for identification, the filing said, with the credit records storing information about borrowers that would help calculate their credit ratings.
“Credit scores generated by conventional techniques may be incomplete and unclear,” said the application. “The consumer might not be notified when data is submitted that impacts their credit score.”
While blockchain may not have gone totally mainstream yet, it is catching on. A January study published by New York-based law firm Envision IP said the financial industry “dominates” the list of the top blockchain-related patent holders. Combining patents and published applications, the study found several financial institutions among the top U.S. blockchain patent holders, including Bank of America Corp. with 43 patents, MasterCard Inc. with 27 patents, and TD Bank with 11 patents.
Maulin Shah, managing attorney at Envision IP, said the blockchain patent filings are relatively new, having started around two or three years ago.
“And it’s not really cryptocurrency-related technology, it’s more using blockchain for various database management functions,” he said.
Blockchain ideas are just one of many patentable avenues banks are exploring.
RBC also has a March 2018 patent in the U.S. for a “system and method for presenting dynamic visualizations.” The patent aims to help turn complex data and financial information into easier-to-understand visuals.
These patent filings are likely just the tip of the iceberg. Details of Canadian-based applications are only made public after 18 months of confidentiality, keeping potential inventions temporarily concealed from prying eyes.
There are, however, concerns about banks not moving fast enough when it comes to technology. Consulting firm Accenture Plc recently conducted a survey of 80 North American bank executives and found nearly 80 per cent said their institution’s existence could be threatened “if they don’t update technology to be more flexible and capable of supporting rapid innovation.”
But with patenting, there is no guarantee that an idea will come to fruition. Death also said that there is never a “silver-bullet patent,” and that it is “clusters and groups” of patents that show where an organization may be focused.
“Most patents, by a huge margin, are just incremental improvements on existing technology,” he said. “Just because you’re seeing filings around augmented reality and such in a patent filing doesn’t mean that that’s going to turn into a product or service. It means that those are areas that are being explored and investigated.”
There are other forces pushing the banks towards technological innovation, such as costs, staying ahead of fintech upstarts, and the threat of a challenge by the major tech companies.
Shah said the general trend in the financial services industry over the last decade, specifically with large retail banks, is updating their legacy systems to newer technologies.
“We’ve seen a lot of patent filings just related to various types database management technologies,” he said. “But it is primarily software-related technology that these banks are filing for.”
Technology has become more central to banking and the economy in general, leading to a boom in patents overall. According to the United States Patent and Trademark Office’s website, its backlog of yet-to-be-examined patent applications was 540,677 filings long as of February.
A number of those, it can be safely assumed, were made by the banks.
“This is a repeatable pattern in other industries where technology and innovation become very important, that this function develops to support that innovation agenda,” Death said.
However, he added, “If TD didn’t have innovation, then my shop should be shut down.”
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