Last week Apple unveiled Apple Pay, a new payment system, to be available for the new iPhone 6 and iWatch. The technology, combining Near Field Communication (NFC) with Apple’s Touch ID feature, will be a new revenue stream for Apple. The company reportedly will collect 0.15% of each transaction handled through the Apple Pay service.

Over the past few years, we have seen a series of technological innovations in the financial sector from incremental improvements to potentially disruptive forces. Retail banking has been particularly impacted by the introduction of technologies targeting payment systems with a specific focus on the growing market of mobile users. From open source payment systems such as Bitcoin,, to new entrants such as Square and well-established companies like Amazon with Amazon Mobile Payment and Google’s Google Wallet , we have seen a number of new ways to complete financial transactions take the stage in the last five years. What does this mean for the future of retail banking? What impact would this have on the traditional banking sector and multi-billion dollar banks such as Citigroup and Wells Fargo?

Given that the disruption is driven by technology and innovation, we decided to take a closer look at relevant patenting activity in banking and finance. Currently, a total of 25,698 active patents and patent applications exist under the G06Q IPC (international patent classification) code, which cover areas related to banking (e.g., data processing systems and methods adapted for financial/commercial supervision or forecasting, etc). The following chart shows the top ten companies in this space.

Top 10 Patent Filers in Banking

What is interesting here is that instead of major bank names, we noticed top tech companies, such as Google and Microsoft, among the top 10 patent filers. The following table shows the top 15 patent holding entities in the banking sector.

Top 15 Patent Filers in Banking

Among the names, we also see Intellectual Ventures, a patent holding entity that has been accumulating patents and is currently standing at number 15 on the list. Some of the names that have not made it to this list, include: Mastercard (16), American Express (26), Wells Fargo (60) and Citigroup (298). Apple (24) is expected to begin climbing quickly now that it has officially launched the Apple Pay service.

Taking a closer look at their portfolios, we decided to consider only patents and patent applications under the G06Q20 IPC code, which is directly related to payment architecture as it is particularly more relevant to consumer and mobile market. The following table shows the top 10 players in the Payment Architecture space. Since patents are to some extent an indication of future products and direction in strategy, the list suggests that Visa, Mastercard, PayPal (eBay), and Bank of America will most likely be able to maintain their positions and benefit from innovations in this space, while some other financial companies will either need to obtain licenses or directly use the technologies developed by these companies, and other new entrants, to remain competitive. Among the top 10 worth mentioning is, Blaze Mobile (9), a company founded by Michelle Fisher in 2005. Google (11), while not yet in the top 10, is actively innovating in this space.

Top 10 Companies in Payment Architecture Patents

Now, what does this mean for future of retail banking? Based on recent developments, it is quite possible that some of the major tech companies with a strong ecosystem around their products and a large user-base, will expand into banking and the financial market. In the same way that PayPal has gained market share in recent years, the trend will continue. With more transactions happening online, consumers will see no reason to take their money out of their Apple Pay or Google Wallet accounts. Retail banking institutes that miss this wave and lag behind in innovation, will need to obtain licenses, acquire patents, or expand their internal R&D teams to keep pace. Otherwise, they will face increased transaction costs and a decrease in total assets, as customers will move to keep their money elsewhere.