Management Consulting

The financial sector is undergoing significant transformation due to the rapid rise of fintech companies, which has created unique challenges related to intellectual property (IP) and litigation. Traditional financial institutions are increasingly at risk of IP infringement lawsuits, particularly as they compete with fintechs that possess larger patent portfolios. For instance, a notable case involved a $300 million damages award against a multinational bank for patent infringement, highlighting the potential financial peril for banks facing similar claims. In 2021, the average damages from 106 financial services infringement suits totaled $41.36 million, underscoring the material risk that IP litigation poses to both established banks and emerging fintechs. To address these challenges, Aon proposed a tailored solution: Intellectual Property Liability Insurance (IP Liability). This insurance product is designed to protect financial institutions and fintechs from the risks associated with IP infringement claims. By utilizing IP Liability Insurance, firms can cover contractual indemnities and mitigate the financial impact of potential litigation. This solution not only allows fintechs to focus on innovation without the looming threat of costly lawsuits but also enables traditional banks to collaborate with fintechs, knowing that they have a safety net against IP-related risks. The implementation of IP Liability Insurance has proven beneficial in fostering partnerships between banks and fintechs, facilitating innovation while safeguarding against the financial repercussions of IP disputes. As the financial landscape continues to evolve, understanding and managing these new technology-related exposures through specialized insurance products like IP Liability Insurance is becoming increasingly critical for firms in the sector.