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Nearly seven out of ten patent applications for investment-related artificial intelligence in South Korea were filed by startups and non-listed SaaS companies, according to a report from the Korea Capital Market Institute released Tuesday. The data reveals a striking inversion: the firms building the future of Korean finance are not the banks and brokerages that dominate the industry, but the venture-backed outsiders selling tools to them.
The Numbers
Of all financial investment-related AI patent filings in Korea, 67% came from Software as a Service companies. Within that group, 76% of patents were designed for B2B sale — tools built to be licensed to financial institutions — while just 14% targeted retail customers directly. The pattern is clear: Korean fintech startups are not trying to replace banks. They are building the infrastructure that banks will pay to use.
Patent filings clustered around standardized, rule-based tasks where AI automation offers immediate efficiency gains: consigned trading of financial products, monitoring systems for abnormal trading activity, and stock price analysis tools. These are high-volume, repetitive processes where pattern recognition outperforms human analysts on speed and consistency.
Where AI Isn’t Going — and Why That Matters
Equally revealing is where startups are not filing patents. The report found minimal activity in areas involving non-disclosed information, human relationship networks — such as deal sourcing in investment banking — or tasks carrying high financial risk. This is not a technological limitation so much as a regulatory and commercial calculation. Building AI for standardized compliance monitoring is a defensible, sellable product. Building AI that makes autonomous high-risk trading decisions invites regulatory scrutiny and liability that venture-stage companies cannot absorb.
The gap also exposes a structural weakness. If AI innovation remains confined to routine tasks, Korea’s financial sector risks automating the easy parts while leaving the highest-value activities — proprietary deal-making, risk assessment, portfolio construction — untouched. The Korea Capital Market Institute’s report explicitly flags this: for AI to spread across the entire financial investment industry, active government and regulatory intervention will be necessary.
Why Banks Aren’t Filing
The 67% startup dominance raises an uncomfortable question for Korea’s established financial institutions. Korean brokerages posted record profits through 2024-2025, yet their patent activity in financial AI remains negligible compared to venture firms a fraction of their size. The pattern mirrors a global trend — incumbents prefer to buy rather than build AI capabilities — but in Korea the gap is unusually stark.
Part of the explanation lies in Korea’s broader AI ecosystem. The country ranks third globally in AI patent production, behind only the US and China, with Samsung and LG alone accounting for 9% of all Korean AI patents over the past decade. But that strength is concentrated in hardware and consumer electronics. In financial services, the innovation is coming from below — from startups leveraging machine learning techniques that featured in 77% of all Korean AI patents filed between 2010 and 2021.
Government Fuel
The startup patent surge does not exist in a vacuum. The Korean government has established a National Growth Fund valued at KRW 100 trillion ($72 billion) through public-private financing to channel capital into advanced industries, with AI explicitly designated as a priority. For startups and SMEs, the fund offers equity investment and subordinated debt. This policy architecture — combining regulatory support with direct capital deployment — helps explain why venture firms, not incumbents, are driving patent activity: the incentive structure is built for them.
The challenge now is whether patent filings translate into deployed products. Korea’s AI investment ecosystem remains nascent despite the patent output. Access to early-stage capital is relatively straightforward, but scaling growth capital for international expansion remains a persistent bottleneck. If Korean fintech startups cannot grow beyond their domestic B2B market, the 67% patent share becomes an academic achievement rather than an industry transformation.
Sources: Koreatimes, Economic Times
