Capital One Seeks Creative Spark with Purchase of Design Firm
Taking their cues from popular consumer brands and digital upstarts, financial institutions are modernizing their websites, ATMs, and mobile apps in hopes of creating a better digital banking experience and, ultimately, attracting and retaining more customers.
Capital One has snatched a designer from Google's touted advanced technology and projects team to help boost the bank's mobile commerce and payments technology development.
Capital One has acquired and partnered with a series of technology companies and is now starting to build digital services that hinge on the new tech. One such pilot lets small business owners distribute discounts to nearby shoppers' smartphones for a fee.
Gavin Michael, Chase's relatively new head of digital, shared some plans for heightening the emotional levels of mobile banking.
Capital One's new Capital One Wallet is a cardholder app for Apple's devices that uses an Android-like pattern-recognition feature for authentication.
"If you can't hire top talent, buy it" is a common rationale for bank acquisitions. Capital One appears to have followed this advice in an unusual area: digital design.
Last week the retail bank and credit card issuer acquired Adaptive Path, a well-respected web design and consulting firm, for undisclosed terms. The firm's 30-odd employees, who have electrified websites and apps for the likes of National Public Radio, Airbnb and Twitter, will join Capital One's design and innovation team.
The move underscores Capital One's ambitions to become a digital banking leader and is one of several acquisitions the company has made in the tech field in recent years. It also underscores the growing importance of user experience at a time when bank customers have an increasing number of options beyond their banks for financial products and services.
"When the paint starts to peel on the walls of the branch and the carpet starts to fray and the glass is scratched, what happens? It gets renovated," said Jacob Jegher, a research director at Celent. "Same can be said for digital banking."
Adaptive Path, which formed in 2001, announced its new home in a blog post published in early October. Jesse James Garrett, chief creative officer at Adaptive Path, wrote:
Believe me, no one here was more skeptical than I was. I simply could not imagine that a huge bank would be able to foster an environment of creativity in which we could truly flourish. But honestly, when it comes to truly human-centered thinking, Capital One is among the top tier of all the organizations I have worked with in 15 years of consulting.
Capital One said Adaptive Path would help it to "push our thinking" as it tries to "reimagine banking."
"There are few spaces as ripe for technology-led disruption as how people relate to their money," a bank spokeswoman, Tatiana Stead, said by email. "The acquisition of Adaptive Path is a logical next step for Capital One in focusing on delivering innovative, easy-to-use mobile and online tools and resources for our customers."
The purchase comes on the heels of Capital One launching its digital wallet app. The bank is also one of only a few named financial institutions to make Apple's mobile payment capabilities available at Apple Pay's expected October launch.
The bank has bought a mobile startup that creates geo-located offers (Bankons), a spinoff from Citi that develops software that analyzes spending data (Bundle), VeriFone's mobile point-of-sale card-swiping device (Sail), and ING Direct.
Adaptive Path, which will keep its name, said the design firm is staying together as a group. Everyone at the target firm was offered an opportunity to work for Capital One and all of the design firm's execs will join the bank, the company said.
The acquisition could help pressure rivals to strengthen their internal design teams, and in turn, raise the bar for financial services experiences more broadly.
Better user experiences have been much talked about within banking for months. And there have been some notable investments to make it so. Monitise, a mobile banking and payments vendor, announced in September 2013 it acquired Grapple Mobile Ltd, a mobile design agency.
JPMorgan Chase hired Tim Parsey, a former Yahoo design exec, and recently updated its app to include local imagery at login. (Someone in LA would see the Santa Monica pier, for example).
Capital One has publicly stressed the importance of design for years. It operates chic cafes, where developers and others can hang out, in addition to running several innovation labs.
In July, the bank scored Dan Makoski as its vice president of design. Previously, Makoski worked for Google.
"Design is central to Capital One's direct bank strategy," said Mary Monahan, executive vice president and research director for Javelin Strategy & Research.
The purchase could help speed up future projects in the bank's ongoing quest to figure out how to make innovation work, say analysts. It also offers an example of how to score elusive talent: buy the company.
Broadly, banks are under more pressure to focus on better design because of the flood of emerging form factors.
"I think every leading bank needs to be thinking about design now," said Monahan.