Companies in the US finance and insurance sector have increased their R&D investment by 70.4% compared to the previous year, according to the latest annual data. The second highest increase of all sectors in the US.

In the latest year, companies in the sector invested a total of $20.9 billion on R&D, up from $12.3 billion the previous year. The level of increased investment is nearly seven times higher than the US average.

Specialist tax experts highlight that companies innovating in the sector could be missing out on tax savings, and are encouraged to examine their own R&D spend beside R&D tax credit criteria. The average successful claim from the sector was $1.1 million in 2022.

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The analysis finds the recent surge is part of sustained investment in innovation from the sector, with a near three-fold rise in R&D investment over half a decade. Finance and insurance companies now accounts for 1.74% of R&D spend across all companies in the US.

The research, collated by R&D tax credit specialists Source Advisors, analyzes up to 10 years of R&D investment figures in the US using the latest available data to highlight the sectors which are investing in innovation to fuel growth.

“Investment in R&D is no longer optional but a strategic necessity to stay ahead in the competitive landscape,” said Moises Romero, senior director of tax controversy at Source Advisors. “We’ve seen through working with national and international firms in the finance and insurance sector the increased importance placed on being at the forefront of technology to improve existing services and identify new innovation routes”

“R&D spend can span a breadth of investment areas, such as design and development of new software components, developing data mining techniques, through to development of risk management systems. With specialist guidance, companies in the finance sector stand to realize substantial savings on their tax bills through R&D tax credits.“

“In the rapidly evolving sector of fintech, the allocation of increasing budgets to R&D and innovation is primarily driven by the need to stay ahead in a fiercely competitive market,” said Nathan Flanders, CEO at Mandala Exchange. “New technologies like blockchain and AI continuously reshape financial services, requiring constant innovation to offer secure, efficient, and user-friendly products.”

“For companies looking to optimize their R&D investment, adopting a model of continual review and alignment with strategic objectives is key. By doing so, businesses can ensure that their investment in innovation not only fuels growth but does so in a way that delivers measurable returns.”

Accounting