Trends in Financial Innovation: Evidence from Fintech Firms

Abstract In 1971, the patent for the Automated Teller Machine was awarded to David Wetzel. While possibly not the first application of financial technology, since 1971 time, the innovation in the financial industry has grown beyond expectations. However, most studies in innovation ignore the financial sector altogether. In this study, the authors investigate financial technology firms and innovation. After identifying firms that are considered financial technology, the authors collect innovation outcomes such as patents and data breaches associated with those firms. The authors show that patent activity has enjoyed modest growth year over year; however, firms still have challenges to overcome such as market risk and data security. This study serves as a perspective on financial technology.