Bank of America has filed more than 50 patents related to blockchain technology. While it is not entirely clear which applications the bank is developing, there could be exciting use cases in the making.

Bank of America (BofA) is one of the most prolific patent applicants of blockchain technology. The company now owns an impressive collection of more than 50 blockchain-related patents.

The bank has made headlines again last month by filing yet another blockchain patent. The latest filing aims at shared ATM networks powered by blockchain technology.

But despite all these patents, one question remains: What are they going to do with it?

BofA is bullish on blockchain technology

While other banks have been slow in jumping on the blockchain trend, BofA is forging ahead. The bank sees the potential of the technology and doesn’t want to be left behind.

“While we’ve not found large-scale opportunities, we want to be ahead of it, we want to be prepared,” says BofA’s Chief Technology Officer, Catherine Bessant.

In general, the bank is bullish on the technology.

Last year, the BofA’s analysts have predicted the total blockchain market would eventually grow up to $7 billion. The prediction was based on the assumption that 2% of all servers would one day run on blockchain technology.

In its report, BofA specifically highlighted the use of Blockchain-as-a-Service. Another key focus area of the technology will be retail operations and cloud computing operations, according to BofA’s analysts. The report gave no particular timeline for the market growth, as the technology is not yet widely used.

Blockchain-based ATMs

BofA’s latest patent filing was published by the U.S. Patent and Trademark Office (USPTO) on 26th December 2018. It describes a system of blockchain-based cash-handling devices that can “handle a relatively larger amount of transaction volume while reducing its physical cash transportation needs.”

The filing explains that currently, ATMs are dedicated to a particular bank and its operating systems. However, if different banks could share access to a single software system, the ATM network could operate more efficiently and at a lower cost.

Thus, the bank is exploring an “ATM-as-a-Service” solution which could enable customers to transfer money across the same ATM network or even access point-to-point video communication using the ATM, independently of who owns the ATM.

Ethereum-based letters of credit

Equally exciting is BofA’s partnership with Microsoft, announced in April 2017. Both companies are working on an Ethereum-based application that aims at automating the process of creating a standby letter of credit.

A letter of credit is a type of guarantee that creates trust between two or more business parties. Via a letter of credit, an issuing bank guarantees the payment on behalf of the applicant to a beneficiary.

Currently, multiple parties can only contribute to such a letter after other parties have done so. Hence, if there is an error or an inaccuracy, the whole process needs to start over again from the beginning.

BofA’s goal is to use Microsoft Azure’s BaaS tools to create a letter that is encoded on the blockchain and executed via a self-executing smart contract.

Ann McCormick, BofA’s Director of Trade and Supply Chain Finance, says, “You have these smart contracts, that the blockchain facilitates, that do both routing and event triggering. But they also can have the terms that Microsoft or Bank of America require in that standby letter of credit.”

Crypto-related patents

Catherine Bessant points out that the bank makes a clear distinction between blockchain technology and cryptocurrencies. As a currency, she says, digital money is highly risky because the identities of the sender and the receiver are hidden.

But despite the crypto-skepticism, the bank has filled a number of crypto-related patents.

In December 2017, BofA was awarded with a patent that outlines a digital currency exchange system.

In a patent filing published on 23rd August, BofA has applied for a patent on the development of a secure crypto storage system.

In September, the USPTO shared a BofA patent for adapting multiple digital signatures in a distributed network.

In October, the bank filed a patent that aims at improving the security of private keys.

Just a PR stunt?

A patent is just that: a patent. It doesn’t mean the bank is necessarily going to launch an innovative product at all.

A former BofA employee whose name is listed on 8 of 50 blockchain patents called out the bank in August 2018, claiming the patents were meaningless and filed to attract press coverage to make the bank appear progressive in the FinTech space.

But filing 50 patents just to attract media attention seems over the top. Also, most banks make an effort to hide their blockchain initiatives from the public, why would BofA do the exact opposite?

With 50 patents, obviously, the bank is working on something. We don’t know what it is exactly that they are trying to accomplish, but surely, there is work going on.

The race for the best blockchain applications in the banking system has already started a long time ago. Catherine Bessant is exactly right: Banks need to move forward on blockchain, or they will eventually be left behind.


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