Financial services patents hit seven-year low Worldwide patent applications in financial services have reached a seven-year low, according to new research, raising questions about whether cost cutting in the sector is holding back innovation. The decline comes at a time when banks are facing an increasing regulatory burden and trying to recover from the damage of the Libor rate-rigging scandal and mis-sold payment protection insurance claims - which have already cost banks billions of dollars. The research, by the RPC law firm, showed that about 3,500 financial services patents were applied for last year around the globe, slightly below the 2006 level and 20 per cent below the peak in 2009. The applications had doubled in the few years leading up to the financial crisis. "Innovation in financial services seems to have been a victim of the cost cutting that financial services groups have been forced to undergo in recent years," said David Cran, a partner at RPC. However, Mr Cran pointed to the increasing importance of new financial services technologies, such as mobile banking and e-money, as a potential catalyst in driving a revival of innovation in the sector. Banks have acknowledged that investing in new technology is also a way for them to save money in the long term. One London-based bank said: "It's not an outrageous leap to say that in a period of increased regulatory-based costs, we see investing in technology as a way to help make us a more profitable organisation - which is clearly a good thing for our shareholders." Attitudes towards technology have been changing in the sector that has mainly seen technology as a cost and support function, rather than a way to compete more effectively with its peers. A recent report from Barclays outlined several new initiatives the bank is pursuing in the next few years, including smartphone apps to enable customers to make faster payments. Mr Cran said there was also a wider increase in Silicon Valley and other technology companies applying for financial services patents. "Technology and financial services are becoming ever more closely integrated, and this is reflected in the changing landscape of financial services patent applications," he said. Last year one Silicon Valley-based company patented a system for automatically depositing a cheque by photographing it with a phone or tablet. In addition to the technology-based innovations, other patents applied for in 2012 included fraud prevention systems in loan applications and new derivatives.