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Finance and insurance sector sees 70% spike in R&D spending.

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TLDR:

Companies in the US finance and insurance sector have increased their R&D investment by 70.4% compared to the previous year. Specialist tax experts highlight that companies innovating in the sector could be missing out on tax savings. Finance and insurance companies now account for 1.74% of R&D spend across all companies in the US.

Key Elements:

According to the latest data, companies in the US finance and insurance sector have increased their R&D investment by 70.4% compared to the previous year, making it the second highest increase of all sectors in the US. This significant increase has brought the total R&D investment in the sector to $20.9 billion, up from $12.3 billion the previous year.

Specialist tax experts urge companies in the sector to examine their R&D spend alongside R&D tax credit criteria to potentially benefit from tax savings. The average successful claim from the sector in 2022 was $1.1 million.

The surge in R&D investment in the finance and insurance sector shows sustained growth and innovation efforts, with a nearly three-fold rise in R&D investment over the past five years. Additionally, finance and insurance companies now account for 1.74% of R&D spend across all companies in the US.

The research, conducted by R&D tax credit specialists Source Advisors, indicates that investment in R&D has become a strategic necessity for companies to stay competitive. Moises Romero, senior director of tax controversy at Source Advisors, emphasizes the importance of technology advancement in the finance and insurance sector to improve services and drive innovation.

Nathan Flanders, CEO at Mandala Exchange, notes that in the rapidly evolving fintech sector, increased R&D budgets are driven by the need to stay competitive. New technologies like blockchain and AI continuously reshape financial services, requiring constant innovation to offer secure and user-friendly products.

For companies looking to optimize their R&D investment, continuous review and alignment with strategic objectives are essential. By doing so, businesses can ensure that their investment in innovation not only fuels growth but also delivers measurable returns.


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