As the digital transformation in the banking industry continues to accelerate, with many transitioning to online business models and the provisioning of technology services to customers, there will likely be a growing issue of intellectual property infringement cases and impending litigation.

Several large U.S. financial institutions and banks have purchased Intellectual Property (IP) insurance in the last few years. This was mainly triggered by the long-running set of patent disputes brought by financial services firm United Services Automobile Association (USAA) over mobile check deposit technology. The USAA has sued a number of banks and has sent warning letters to approximately 100 others. The article, Strategy Lessons From Wells Fargo Fintech Patent Litigation¹, summarizes their seminal case against Wells Fargo.

Transitioning Marketplace and Growing IP Infringement Litigation

The continued drive for banks to develop digital solutions to compete for customer wallet share and cut operating costs has seen the rapid rise of banks partnering with fintechs. In seeking to evolve their digital offerings, financial institutions often work with hundreds of suppliers to help them deliver the required IT functionality. Banks often don’t use their own proprietary technology and rely on that provided by third parties, which is then used under various contractual and licensing agreements. We are now seeing software developers take a more proactive approach to protecting their IP. The number of technology patents in place and the complex and technical considerations required to determine exactly what’s protected by each one make it easy for companies to infringe on patents.

Transitioning from Tangible to Intangible Asset Bases

The number of bank branches in the U.S. has been steadily declining, driven by factors like online and mobile banking, bank cost-cutting measures and a shift in customer preferences. Between 2012 and 2022, the number of bank branches in the U.S. decreased by 16%, from 82,461 to 69,590. Some predictions suggest that the last physical bank branch could close by 2041 if the current closure rate continues.²

This shift towards streamlining physical corporate footprints and growing their portfolio of intangible assets will further accelerate exposure to IP infringement litigation.

A Case in Point

In January 2025, USAA filed its most recent lawsuit against competitor Regions Bank in Texas federal court, alleging that Regions’ mobile banking application infringes on its patents for remote check-deposit technology.

The complaint claims that Regions’ app violates four USAA patents related to remote deposit solutions originally developed to assist U.S. military members living abroad. This lawsuit is the latest in a series of patent disputes initiated by USAA against financial institutions over its technology. The San Antonio-based company has previously won over $500 million in similar cases against Wells Fargo and PNC Bank and has reached settlements with other banks, including Truist.

USAA, which primarily serves military personnel and their families, developed its check-deposit technology in the mid-2000s to enable members to deposit checks remotely. In its recent lawsuit, USAA contends that the mobile deposit feature in Regions Bank’s app infringes on its patents.³

With hundreds of software suppliers involved in developing their online services, banks face significant challenges in predicting potential patent infringement issues. Determining whether a claim is justified and assessing the cost and speed of resolution is a complex task.

As industries like banking become increasingly reliant on technology, the risk of legal disputes continues to grow. Even with thorough due diligence, accusations of infringement can still arise due to varying interpretations of patent scope and applicability.

Additionally, some firms pursue legal action on a speculative basis. Even if a claim lacks merit, the cost of defending against it remains a burden.

How the Insurance Market Can Help

The insurance market has developed a broad range of products designed to backstop contractual indemnity obligations, fill the gap left by traditional financial lines and cyber products and provide financial institutions with balance sheet protection based on their specific needs and circumstances. Intellectual property (IP) insurance (or infringement liability insurance) typically covers defense costs, damages and settlement payments. Additionally, insurers often offer supplementary services, such as crisis management support. Banks have started to purchase dedicated protection to hedge this developing operation risk and mitigate various claim scenarios, including:

• Third-party claims made against the bank implicating the bank’s products and technology services
• Third-party claims made against the bank’s customers implicating the bank’s products and technology services
• Third-party claims made against the bank implicating a vendor’s products/technology/services should that vendor lack the financial wherewithal to indemnify the bank

Legal defense in IP cases can be extremely costly, often reaching millions of dollars due to the need for specialized legal expertise in this complex field. Recent cases brought by USAA demonstrate that settlements can amount to hundreds of millions of dollars.

Currently, the largest banking institutions are at the forefront of IP infringement lawsuits, prompting more firms to explore insurance as a safeguard for their operations. However, the issue is increasingly affecting mid-sized and community banks, which typically have fewer financial and administrative resources to navigate these legal challenges.

A company’s ability to understand and mitigate potential IP risks will significantly impact its capacity to expand its portfolio of intangible assets and transition to more digital-first models. With IP litigation expected to rise in the coming years, due diligence alone is insufficient to fully mitigate risk. As more businesses recognize the importance of managing their exposure, many have secured coverage. Brokers have also refined IP insurance products over the last decade to better align with market needs.

IP litigation insurance is no longer a luxury—it has become an essential tool for patent attorneys and litigators. For companies with valuable intellectual property, working with a trusted advisor to help manage this risk should be a top priority.

The insurance markets have come a long way over the last few years and can now generally turn around pricing indications in under a week relying largely on information available in the public domain.

1. www.fbm.com/publications/strategy-lessons-from-wells-fargo-fintech-patent-litigation/
2. US Could Lose all Bank Branches by 2041 – Banking Exchange
3. USAA sues Regions Bank over mobile banking patents | Reuters

Matthew Keville

Divisional Director – Professional, Executive & Cyber Risk

Joel Sulkes

Senior Managing Director – Financial Institutions