Banks Should Act More Like Apple: Cap One's Innovation Chief
Mark Jamison spends his days thinking about how best to turn the slow, sluggish machine of banking into something that looks more like Apple's iOS -- a platform.
"Let me give you an example," says Jamison, who manages Capital One Financial's innovation lab right outside of Washington, D.C. "Let's say you believe that a bank like Capital One, has some of the best underwriting standards that it runs through a black box on the backend. Why couldn't you open that up to every credit union?"
He notes that no one is yet using open APIs to handle that kind of intellectual property sharing.
"It could be organizations that are doing farm financing, or auto financing, and instead of having their own underwriting department, they could just ping our backend," says Jamison.
Someone loses a headache; Capital One, or any bank really, gains revenue.
Instead, bankers have been dragging their feet, in part due to pure hubris, Jamison says.
"What I have seen is lots of third parties look at our industry and assume that they are going to come in and disrupt it," he adds. "They then get down into it and they realize that what we do is really hard and there is a whole set of regulatory, legal and capital requirements." They might turn to banks for a hand.
To which bankers respond: "Nope, you're a competitor,'" says Jamison, adding that he doesn't think it has to be that way.
Jamison is a big part of the reason that the relatively young Capital One stands out as a technology innovator among its peers. He was a keynote speaker Thursday at CEB TowerGroup's annual conference in Boston.
Already, Capital One has four open APIs (a set of commands, functions, and protocols used to build its software, that others can use to interact with it). One is an authentication and token API, Jamison says.
"It allows us to ensure that you are you, securely," he says, simply.
And there is a rewards API, as well. He describes a process whereby a programmer could build specific code into a smartphone app that could let a person scan a product's serial number, and then potentially offer that shopper a deal if the merchant has signed an agreement with the bank.
The bank is additionally trying to learn lessons from other industries. It's been looking at, of all categories of companies, newspapers for inspiration -- specifically the Boston Globe, apropos because the conference he's speaking at is being held in the Globe's backyard.
"If you go to Boston Globe dot com, it will default to Boston's weather in the top left hand corner," says Jamison. "But if you go to the website from, let's say, your iPhone, [the website] will sense that it's your iPhone, and it will pick up its location and it will serve you the weather where you are."
In 2011, the Globe launched an adaptive design website that accomplishes what Capital One would perhaps someday like to mimic. The technology is different from responsive design, which is a technology that just scales websites to fit the size of a user's screen -- desktop, tablet or smartphone.
Analytics bleeds into everything the innovation lab does.
In his presentation, Jamison showed a myriad of visualizations that data analysts might explore when trying to figure out how to best tailor merchant funded deals or offers to customers. (Interestingly, for instance, folks that pay for gym memberships are more likely to eat at In-n-Out Burger than at Jamba Juice.)
Even when it came to figuring out where to best locate the lab locations and hire employees, Capital One mapped centers of entrepreneurship relative to venture capital and angel tech investment, says Jamison. The bank opened its innovation lab in Arlington, Va., one of three locations where the bank is conducting tech experiments, last year.
"Capital One has a founder and CEO who is an entrepreneur and growth executive," says Jamison. "So relative to our industry, I think we are making investments for organic growth and for the future more than our competitors, and the labs happen to be one manifestation of that."