- For nearly a decade, Bank of America has been granted more patents than any other financial services company.
- Patents are an integral part of the bank's technology strategy, which does not have an innovation hub like some of its Wall Street counterparts.
- Two Bank of America executives explained how the process was developed and why they believe it has been so successful.
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The true source of much of Bank of America's innovation comes from non-fancy tech offices located in trendy neighborhoods in New York, Silicon Valley, or Charlotte.
A key element of the technology strategy of one of Wall Street's largest banks may not seem sexy or innovative, but it has proven effective: patents.
While many Wall Street companies are quick to refer to dedicated technology centers, incubators, or hubs that are vital to their innovation, Bank of America cites the use of patents.
In the first half of 2020, the bank broke the previous record for registered (415) and granted patents (184). The bank has a total of 4,277 patents that have been granted or registered by 5,600 inventors in 42 states and 12 countries.
The strategy began in 2010 when CEO Brian Moynihan doubled the bank's "redevelopment" budget to $ 3 billion in the hope that the bank would be able to innovate out of the financial crisis.
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A core part of this philosophy is that everyone, not just technologists, has the ability to come up with innovative ideas that can be brought to market.
"It was a very close collaboration between the different business units and technology units, and most importantly, just a broader workforce, all of whom had the opportunity to contribute their ideas, streamline them based on our business strategies, and ensure that real customer problems are solved." Cameron Wadley, chief operating officer for the technology organization for customer-facing platforms, told Business Insider.
"It's hard to imagine that we would ever stray from this particular strategy."
Bank of America has been aggressive with patents
Bank of America hasn't looked back since the original idea of using patents came up.
From 2012 to 2018 the bank was the top financial services company in Intellectual Property Owners Association annual list from organizations to which most of the US patents have been granted. Capital one, The company saw the largest increase in patents of any company in 2019, broke Bank of America's streak in 2019, despite the bank seeing a 30% increase in the number of patents it granted over the previous year.
The patents aren't just for show either. Erica, the bank's virtual assistant for private customers; Keep the change, its automatic savings program; and biometric authentication on mobile devices are all current product features that can be linked to patents.
A patent tied to augmented reality was the result of talking to clients about estate planning, Katherine Dintenfass, senior vice president of digital banking at Bank of America, told Business Insider.
"By understanding what some of these vulnerabilities were – how they went through it; how they want it to be more proactive rather than reactive – we could see this as a solution that would make it really easier for them to address it overall." said Ink barrel, who is the bank's second largest patent holder.
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In other cases, patents are the result of a technologist who has an idea how a technician can be used for a solution and then consults with staff on the corporate side of the company to understand if the problem is real, faced with the customer.
As a result, Ink Barrel and Wadley often work closely together, merging the business and technical sides of the company to figure out how best to meet customer needs.
"It's really about looking at all the information, all the findings and ideas. And that comes from our broad group," said Dintenfass.
"What will really improve for our customers? How do we make this possible so it can actually come to life? What parameters do we want to set up? Is it something we think is worth moving?" Forward? Is it worth the risk? Are we making sure everything is safe? "She added.
BofA says it's not a patent troll
A less optimistic formulation of Bank of America's strategy would be to simply label the company a patent troll. Few financial firms have the resources that Bank of America does. Filing so many patents could simply be a way to slow down innovation among smaller, more agile competitors pursuing the same type of technology.
Inkpot and Wadley both pushed back to the idea that the bank would apply for a patent that did not take into account a customer's needs or weaknesses.
Bank of America's approval rate – or the percentage of patents approved versus pending – is above the national average. In 2019, the admission rate was 72%, compared to an industry average of 60%.
"There doesn't have to be a feasibility or reality associated with it," said Dintenfass.
“Time spent innovating is time not spent on other activities, so it is very important that we are confident that the energy we put into it will actually lead to something that is useful for our customers matters, "added Wadley.
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