Buy Bank of America Stock as an Investment in Innovation

Even at its fairly lofty valuation, BAC stock remains an investment you can bank on

When you think about Bank of America (NYSE:BAC) stock, you probably consider it a relatively safe investment in an established, gigantic bank. Maybe it’s the type of stock your father and grandfather would buy and hold; after all, in 2008 the U.S. government showed its willingness to bail out big banks when they’re struggling.

Buy BAC Stock as an Investment in Innovation
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In other words, you might not consider a stake in BAC stock as an investment in technological progress or innovation. However, you might be surprised at the strides Bank of America is making — and after you see some of the company’s patents, you might never look at this old bank the same way again.

Be Patient with Bank of America Stock

The challenging thing about investing in innovative companies is that they typically don’t enrich shareholders immediately. Therefore, no one ought to expect the BAC stock price to skyrocket just because they registered a patent or two … or 2,000, in the case of Bank of America.

That’s right: Bank of America has registered over 2,000 patents, and that’s just in 2019 so far. Between the company’s patents and its applications for patents, Bank of America’s running total currently exceeds 3,500. The bank also employs over 5,000 inventors on multiple continents; needless to say, Bank of America wants to be on the cutting edge as an innovator.

Clearly it’s a point of pride for the company, and Bank of America’s chief operations and technology officer, Cathy Bessant, wants us to know that the bank takes patents very seriously at part of its business model:

Technology is important to banking and how we connect with our customers and clients. Our competitive advantage is driven by innovation and creativity. Patents allow us to protect our investment in new products and services and lead the industry in commercial application.

Bessant also emphasized that the bank considers its employees as inventors and that Bank of America intends to shape the technological landscape. Perhaps it shouldn’t be too shocking, then, that for seven consecutive years Bank of America has earned a spot on the Intellectual Property Owners Association’s list of the 300 organizations granted the most patents in the U.S.

The Biggest and the Best

Given the sheer size of Bank of America, the second-largest bank in the United States, it makes perfect sense that this company is a leader among banks in terms of research and development. As Francesca Arnaboldi and Peter Claeys explain in Innovation in Financial Services: A Dual Ambiguity, released under the auspices of Cambridge Scholars Publishing:

Larger banks can more easily assume the business risk of innovating. Innovation requires a large initial investment and is subject to technological, managerial and legal difficulties… A large bank is also more likely to possess the specialized complementary assets, necessary for the commercial success of innovation.

Along with a slew of patents in the domains of artificial intelligence, mobile banking, and cybersecurity, I was particularly impressed to learn of Bank of America’s foray into patents related to cryptocurrency and the blockchain. Case in point: Bank of America’s patent application for an “Authentication and Approval Control System for Distributed Ledger Platform” — i.e., a multi-tiered digital-wallet interface.

Rather than attempt to explain how it works and embarrass myself, I’ll let Bank of America do the talking on my behalf:

Through the digital wallet interface, a user… may be able to partition digital currency holdings into one or more differentiated storage compartments or tiers. Each of the one or more compartments may be password secured and may only permit access to the amount of digital currency holdings specified by the user.

Extra layers of security are undoubtedly an added value for crypto storage devices, and I applaud Bank of America for not only seeing cryptocurrency as a viable form of money, but for taking steps to help ensure the security of crypto users’ funds.

The Takeaway on BAC Stock

It amazed me to find out that this old-school bank already has won 36 patents related to blockchain technology and they have 31 more blockchain patents in progress. But then, it’s a pleasant surprise to see an old dog learn new tricks – and BAC stock investors could be pleasantly surprised if their long-term holdings appreciate in value as Bank of America leads the way not only as a bank, but as a leader in tech innovation.

As of this writing, David Moadel did not hold a position in any of the aforementioned securities.

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