4 Ways BofA’s Patents Portend the Future of Auto Finance

Quick quiz: How many patent applications were filed by Bank of America Corp., the 7th-largest auto finance company in the nation, in 2014?

1. 97
2. 3,145
3. 251
4. 14
5. No clue

If you answered C, you were correct. (If you answered E, our sympathies.)

A few of those 251 patent applications relate to auto finance, and they deserve some exploration. What follows are the applications that bear relevance to auto finance, courtesy of a wonderfully detailed post on BofA’s patent efforts by IPWatchdog.com, as well as an overview of why each has a bearing on the industry’s future:

1. Peer-to-Peer for Nonprime Auto Loans. Bank of America filed a patent last year for a peer-to-peer platform, entitled “Networking Platform for Lending,” that serves as an alternative for obtaining a loan to those with low credit ratings. The patent application claims a lending network system that includes a processing device that receives a loan request referral from a traditional financial institution or potential borrower information from an institution that had previously declined to fund the borrower. It presents one or more potential lenders which are not associated with the institution to a potential borrower, and receives an intent to fund at least a portion of the potential borrower’s loan request and facilitates a loan agreement between the borrower and lender. The key here is that the patent specifically is designed to apply to nonprime lending, where diffusion of risk across parties has the greatest benefit from the lending standpoint.
2.  Going Deeper Into Purchasing Processes. Another patent application from Bank of America — called “Readable Indicia for Fuel Purchase” — allows for a mobile app for purchasing fuel for a vehicle from a fuel station. The app would: a) initiate a fuel purchase application on the apparatus; b) determine identification information associated with a fuel pump that will be used to fuel a vehicle; and c) transmit a purchase authorization request, as well as determine a payment amount or a discount eligibility. The service would also process the purchase authorization request, transmit an electronic receipt to the app and authorize the activation of the fuel pump. In other words, “this invention is capable of helping a user understand how much money it will cost to fill their vehicle’s fuel tank to a predetermined capacity,” according to IPWatchdog.com. This patent application appears noteworthy for two reasons. First, it puts BofA deeper into the retail transaction. Second, it gives BofA the opportunity to tag a financing dynamic to retail transactions. Could BofA leverage the app’s value when offering auto loans? Seems likely. Further, there are remarketing implications here, too.
3.  Facilitating Personal Financial Goals. A couple of patent applications filed by BofA advance various means of improving the savings abilities of its customers. One would help customers more effectively save money for a car or other major expenditures, according to the application titled, “Management of Contributions for a Goal.” The patent application describes a server for managing a contribution for a goal. Without getting bogged down in the details, the app is aimed at making savings towards a goal less haphazard for consumers. Clearly, if the goal were a car, Bank of America would be in a unique position to posit that that goal is achieved sooner with an auto loan or lease. That’s a powerful direct financing approach, to say the least.
4.  Digital Tools to Infiltrate Decision Making. Along the lines of the savings-goal tool, another BofA patent would help financial account owners more effectively determine their budget for certain personal expenditures. Called “Use of E-Receipts to Determine Total Cost of Ownership,” the patent application protects a system that identifies communications between a customer and a merchant; extracts purchase transaction data from the communications; converts purchase information data into a format compatible with an online banking application; integrates the data into the application so a customer can access that information and determine an estimated total cost of ownership of a product based on the product’s purchase price and other costs associated with that product. The app even more tightly ties to the credit application process. According to IPWatchdog, “this invention is configured to integrate online and offline purchase data so that an individual can view all costs associated with a certain product, such as a total cost for a vehicle that includes fuel and insurance costs.” And borrowing, we would expect.