• Richard Murray, Partner |
  • Usman Wahid, Partner |
  • Christopher Overton, Senior Manager |
4 min read

Innovation is transforming banks’ operating models to create new value through the development of technology and other intellectual property assets (IP) in different parts of the business.

New revenue streams are being created by accessing new market segments, such as B2B platform banking, Banking-as-a-Service and data solutions; banks have been able to leverage their existing assets and generate new assets in order to capitalise on these opportunities. These existing assets include their IP as well as their existing banking licences and authorisations. 

This series will consider the approach that banks should take to their IP to help them best commercialise these assets and maximise the value from IP for their overall group.

Innovation and its challenges

Competition to banks is coming from both FinTech and now TechFin. These businesses have taken advantage of the cultural focus within traditional banking on risk and controls rather than innovation and monetisation. However, in this changing environment, some banks now view themselves as more than just financial services entities and have realigned their operating models around a new identity – as data-driven businesses delivering both banking and technology services.

They are meeting this challenge in different ways, using incubators, venture arms, partnerships and joint ventures – even new brands for digital retail banking.

The complexity for banking groups arises because IP monetisation has evolved in a less-coherent way than it has for newer entrants, whose business model has focussed on their IP from the start.

More mature banking groups which have grown through partnerships or acquisitions have entities with different and often conflicting intellectual property aims. They have internal organisational challenges such as dispersed ownership, lack of value historically allocated to intellectual property, and other tax and legal issues.

Systemically important banking groups have also had to contend with structural regulatory interventions, such as ring-fencing.

However, established banks have certain strong advantages over newcomers. Existing assets, including banking licences, customer access and data sources, set them apart.

Their brands are known and trusted – especially in relation to data management – and this compares favourably with the competition, where a trust deficit can exist for certain businesses.

They also own tried, tested and scalable technology that is used for their own-account business and which can be leveraged for future business models.

Where to start?

Incumbents are learning from challengers and are catching up fast on innovation and exploitation of their IP. The last few years have seen some incredible changes in approach with a number of large banks embracing their transformation to a technology and data-driven business.

KPMG has helped its banking clients through this change, working with them on transformational projects to monetise their IP, such as in setting up new structures and organisations to be ready for IP commercialisation. 

Business optimisation for banks

An optimised operating model will enable banking groups to capture commercial opportunities from their IP strategy in a way that maximises overall value for their groups.

Optimisation is complex as it covers many angles in addition to IP strategy, including commercial requirements, tax issues relating to the internal organisation, legal issues relating to protection and exploitation of IP, capital efficiency and ongoing funding, regulatory compliance and others. There can be issues to manage across entities and jurisdictions in order to create the ideal organisational structure(s).

Much of it comes down to the strategy, the structures that will support that strategy, and the governance and administration of those structures: identifying what IP exists and considering where and by whom it should be owned; considering the tax model and potential access to tax incentives; where people are located performing the innovation and commercialisation; which entity will bear the risks and costs of the commercialisation and innovation activity; and whether and how to integrate new operating models with existing group activities.


The increasing pace of commercial change and phenomenal pace of technological innovations makes group-wide IP optimisation essential for banks.

The greatest challenge to optimising and monetising IP is in bringing together the many different strands at play, aligning on priorities across different parts of the business to get a holistic view to lead to overall optimisation.

The next article in this series will consider the main variables which drive optimisation and explain how KPMG can help pull the different viewpoints together to achieve the best outcome for our clients.