Guess Who Holds the Most Blockchain Patents?

Fortune magazine writes:

"Bank of America is currently the largest holder of blockchain-related patents among all companies, according to an attorney co-chairing the Blockchain Intellectual Property Council at the U.S. Chamber of Digital Commerce. With about 45 live patents in hand (meaning they are current and haven’t expired), Bank of America beats out even IBM."

Cathy Bessant, the bank's Chief Technology Officer, admits that the banks has "not found large-scale opportunities" for the technology yet. The article does say, however, that:

"Bessant drew a clear line between blockchain and cryptocurrencies. As a form of currency, says Bessant, Bitcoin and similar kinds of digital money are highly risky when it comes to processing such transactions because the identities of the sender and the receiver are hidden."

  Who says banks don't innovate? BofA's most recent patent creates a way to use security tokens to grant and track access to certain users to the information contained in a particular block. Despite Bessant's comment regarding the "riskiness" of cryptocurrencies, the bank has patents for cryptocurrency-related applications, including:

  • Offline vault storage
  • Transformation
  • Transaction validation
  • Electronic payment
  • Suspicious user alert
  • Aggregation
  • Online vault storage
  • Transaction payment
  • Real-time conversion

What's a Mid-Size Bank or Credit Union to Do?

The answer is probably not "go develop their own patent applications." That said, I can imagine that some banks with a highly specialized market focus might benefit from developing blockchain apps to create or protect their competitive advantages.

For the rest, however, the answer is "understand the implications of what the BofA patents means to their IT strategies and plans." I think it would be fair to say that most mid-size banks aren't doing that--blockchain technology isn't even "on the radar" at nearly two-thirds of banks (although it is at roughly two-thirds  of credit unions).

Mid-size banks and credit unions should press their current core/digital banking vendors to answer:

  1. What do BofA's blockchain patents do?
  2. How are you using--or planning to use--blockchain technologies?
  3. Is blockchain going to be another remote deposit capture? (see "USAA Sues Wells Fargo Over RDC Technology" for the context on this one)

If I were a bank or credit union CEO or CIO, and I didn't get good answers from my core/digital platform vendors on these questions, I'd question the long-term viability of that relationship.

Ron Shevlin
Director of Research
Cornerstone Advisors