The bank-branch café is still booming

Kate Fitzgerald

When Capital One began putting its name on full-service cafés with banking services a decade ago, the jury was out on whether the concept would click with consumers who increasingly turn to digital channels over walk-in branches.

Several years later it's clear that the Capital One Café is a hit worth reinvestment. The McLean, Virginia-based financial giant is sprucing up its network of 50 branch-café locations spanning 18 U.S. states and Washington, D.C., giving each one a new look with menu items targeting younger consumers.

Capital One is replacing longtime supplier Peet's Coffee with new food and beverage options from Santa Cruz, California-based Verve Coffee Roasters and introducing new menu items like avocado toast and ice cream geared to appeal to under-40 adults. 

Coffee drinks still dominate the Capital One café menu, and Capital One credit and debit card customers still get 50% off any hand-crafted beverage. But along with different food items, the facelift brings new drinks including cider and kombucha, which are now on offer at a revamped location that opened this week in Scottsdale, Arizona.

The $468 billion-asset Capital One recently launched a video touting the change, but the company did not respond by deadline for comment, nor did representatives from Verve. A Peet's spokesperson declined to comment on the change. The transition reportedly will be completed by the end of the year. 

Kate Fitzgerald

Capital One inherited its first few bank-office cafés when it acquired ING Direct for $9 billion, and in recent years the financial giant steadily tweaked and expanded the concept to encompass brightly lit cafés with charging stations, WiFi and plenty of space for people to sit, visit or work in urban and shopping-mall zones with high foot-traffic.

Capital One isn't the only bank making room for coffee in its branches. Minneapolis-based U.S. Bancorp received permission from the City of Scottsdale this month to build a bank branch with café space 11 miles away from Arizona's only Capital One café. 

A U.S. Bank spokesperson said the $680 billion-asset bank has incorporated a self-serve coffee bar/café area into its newer branch designs, but the firm has no plans to bring baristas into branches.

Santander opened one of its five global Santander Bank Work cafés in Brooklyn in 2020. The Spanish bank described the location as an "innovation hub" for entrepreneurs and community members with meeting spaces. It provides coffee and food from a third party, and Santander credit or debit card customers get a 30% discount on beverages.

Many other banks have informal coffee bars and space for customers who want to sit down and relax in the branch, said Stewart Watterson, a strategic analyst with Datos Insights. 

"I believe what we're seeing is a more concerted effort to transform bank branches' purpose," Watterson said, noting that banks are using branch amenities to encourage new-customer walk-ins while directing existing customers and those who want streamlined service to digital channels.

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Most research suggests that younger adults prefer to open accounts through digital channels and most don't want to visit branches. But other data suggests that millennials and Gen Z consumers up to age 24 prefer visiting branches to learn about products, according to Watterson.

"Some financial institutions are transforming branches from transaction-processing centers to places where a 20-something would want to hang out, and coffee makes a natural addition," he said. 

After a two-day closure for remodeling, customers lined up to try the new menu at the revamped Capital One café in Scottsdale. 

A mix of young adults and a few baby boomer-age consumers used Capital One café's seating and free office space. Some chatted with Capital One employees who carry small tablets and laptops around the café to answer potential customers' questions or guide them to the two ATMs located in the café.