Dive Brief:
- Capital One executives touted efficiency gains from more than a decade of digital transformation Tuesday during the bank’s Q4 2024 earnings call.
- “This has been a journey for which efficiency was never the objective function,” Capital One President and CEO Richard Fairbank said. “It was one of the many benefits of a tech transformation, but it's very gratifying to see that continue. It's a great long-term story.”
- The bank began modernizing in cloud over a decade ago, completing the bulk of its migrations in 2020 and launching a software division focused on cloud and data management solutions in 2022. Research firm Evident ranked Capital One as a leader in AI innovation among 50 major banks.
Dive Insight:
Capital One leaned on cloud to power growth and ease AI adoption last year. Efficiency improvements were a byproduct of technology investments.
“It's striking that that improvement has come even as we have continued to ramp up investment in technology,” Fairbank said, pointing to the cost benefits of cloud and the high price of running legacy systems.
Fairbank highlighted technology’s role in driving efficiencies as the bank prepares to acquire Discover Financial Services in a $35.3 billion deal announced last year. Stockholders from the two companies will vote on the acquisition on Feb. 18.
“We remain well-positioned to complete the acquisition early in 2025, subject to regulatory and shareholder approval,” Fairbank said.
Discover has also made modernization a priority in recent years. The company tapped 20-year tech vet Jason Strle to become its CIO and expanded its open source footprint in 2023, rolling out a public-facing developer platform where engineers share fintech expertise. Strle set a cautiously ambitious pace for generative AI adoption at Discover last year.
While IT integrations are inherently complicated, Capital One aims to tap into Discover’s technology ecosystem without disrupting the card provider’s core business.
“We hope to bring in the growth business that Discover has and add it to the complimentary growth business that Capital One has and collectively continue to try to get the best of both worlds … bringing better efficiencies and top technology to all aspects of the business,” Fairbank said.
Capital One grew its net revenue 2% to $10.2 billion during the quarter and reported net income of $1.1 billion, the bank said Tuesday.
