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Capital One: Think More Like a Tech Company, Less Like a Bank

Bank Innovation: How will banks compete in a rapidly digitizing world? Capital One CEO Richard Fairbank knows. “We’re going to need to think more like technology companies and maybe a little less like banks,” he told investors on yesterday’s earnings call.

His bank is notable for its high-profile acquisitions of not other banks, but innovators, and not necessarily even financial services innovators. In the fall of 2014, for example, CapOne acquired user experience firm Adaptive Path. At the time of that acquisition, Adaptive Path’s chief creative officer, Jesse James Garrett, wrote, “The more people we meet at Capital One, the stranger it seems that they all work for a bank, of all places. They are genuinely creative, collaborative, and, well, fun people.”

In January, Capital One acquired Level Money, a personal financial management tool aimed at millennials. And while it is acquiring innovative companies, it maintains a robust internal innovation system, with Capital One Labs and its entrepreneurs in residence. It also opened an innovation center in San Francisco in November 2014.

In short, few banks are as aware of the need to go all in on digital as Capital One, and no bank CEO speaks about it more passionately that Richard Fairbank.

He also expressed some pessimism yesterday about realtime banking and payments, saying he doubted that it would be as transformative as some people think and that the path to a fully realtime banking system is a “lifelong, forever journey.”

But more to the point, Fairbank spoke at length about the need for digitize, which is a recurring theme for him.

One thing is absolutely clear and it’s – and we believed this from the beginning – that every bank is going to need to transform itself. The digital revolution is changing banking on just about every dimension that you can imagine basically. It’s changing what it takes to win in payments, in distribution, in marketing, in brand, foundational infrastructure, experience design, if you will, the way information is used. And in the end, that really means the role of talent is central to that kind of transformation.

And so in the talent marketplace, in the partnership marketplace, I think these folks, you can’t just go out there with a checkbook and say here we are. We’re here to bring you into the fold. I think these folks look to see and they come in and kick the tires to say, is this a company that’s bolting digital onto the side of a traditional bank? Or is this a company that is really, like in our case, trying to build a really leading information-based technology company, in a sense?

And the key manifestations of that are inside the company. Are the leaders committed? Are they digitally fluent? Have they digitally reimagined their business? Are they bringing technology talent not just into some like place in IT in a sense, but is it really being brought right into the heart of the business and become sort of who you are?

These are questions all banks should be asking.

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