Capital One Software: The Journey From Bank to Technology Company
This summer, after a years long journey creating and developing its own data management solutions, Capital One launched a new line of business, Capital One Software, to sell the data management and related software products it had developed to other companies who are looking to transition to the cloud.
It represents a culmination of the bank’s efforts to transform itself, its technology, and its organization, as well as a goal to offer what it has learned along the way, and the solutions it has developed and tested, to help other companies achieve the same transformation.
The plug (VB)spoke with Ravi Raghu, president, Capital One Software, International, business cards and payments, about the story behind how Capital One transformed itself, scaling up its own use of data and cloud computing, and then creating a business to sell its software to third parties.
Going all in
According to Raghu, this journey began, in some ways, back in the founding days of Capital One, since “data was at the heart of … our whole… journey as an information-based strategy company, and along the way, we realized that … to be a really well-recognized bank … to be a top bank, we also needed to be a great technology company.” To do so, Capital One first scaled up its own use of data and cloud computing, which Raghu said was driven by the desire to provide “real-time personalized experiences for our customers,” and becoming “more of a cloud-first company.”
“We declared that we would go ‘all in’ on the public cloud in 2016, we completed that journey in 2020,” he said, and “that entire overhaul took the entire company, and all of us kind of rallying together, to pull that off. And it’s on that foundation, that we have this opportunity to … build up this business called Capital One Software,” he says.
Blending the best of both worlds
What prompted Capital One to invest in building its own software and data management capabilities? Raghu said that in order to “be incredibly well-managed, in serving our banking customers,” and “to operate at the scale that we operate on the cloud,” they first searched for what was already available and then decided to build additional capabilities that they needed in-house.
Practically speaking, this consisted of not only a technical transformation, but also an organizational transformation, which included the development of a 12,000-person technology workforce, “adopting more modern methods like Agile-based delivery, use of restful APIs … leveraging microservices … leveraging the power of machine learning and AI [artificial intelligence]” and, in essence, becoming “a full-on technology company.”
“We realized early on, that the bank of the future is actually a technology company,” combining “the best of breed of what technology companies have, and also the best of breed of what … banks are known for, risk management …. [H]aving recognized that early on, we actually made specific choices in our journey to become that technology company.”
A natural extension
Through the process of building their own technologies, Raghu said, “We also kept hearing feedback from companies that we interacted with along the journey, that … they would have loved to get our expertise and experience so that they can accelerate their own … move to the cloud.” It emerged through these discussions that these customers also had data management needs in different areas, and their journey and transition to the cloud bore some similarities with the journey that Capital One had been on with its own transformation.
“[T]he tools that we’ve built are probably tools that these companies could all leverage,” he explained. “And so the point of Capital One Software is to really take all the things that we have battle-tested … and give it to companies that are looking to more effectively operate on the cloud.”
The Capital One Software business, Raghu said, therefore represents a natural extension of the investment and innovation Capital One has put into developing solutions and transforming itself into “a technology company that also does banking.” He explained that “[i]t is taking the experience that we’ve had in our journey, and helping other companies really compress the time that they take to innovate for their customers. And so the opportunity to do that in a B2B software context is really what we’re pursuing through … the software division.”
First up: Slingshot
Slingshot, the first of the products that Capital One Software built and is offering for third-party use, is a data management solution that is designed to help companies optimize the Snowflake platform and manage their Snowflake usage.
Especially for companies that are new to operating on the cloud, Raghu said, it’s important to harness the power of the cloud in a well-managed way. “[W]hat Slingshot does is really provide … a solution that allows you to scale up Snowflake usage appropriately, with controls built into it, with governance built into it. And so it gives you visibility into costs, it allows you to optimize the future spend that you have on Snowflake; that’s really the focus of Slingshot.”
In the future, Capital One Software looks to build and take to market “solutions that are in the broader data management and in the cloud management arenas,” Raghu explained. “[O]ur first foray in Slingshot addresses the infrastructure management space.”
Other categories in which Capital One Software has worked on tools include data publishing, data consumption and data governance. Publishing involves taking data from source systems and making it more accessible to analytical frameworks. Consumption involves taking data and delivering insights that companies can use in developing their strategies and business plans. And governance is “making sure that all of that is well-managed; things like privacy and data retention [are] handled appropriately,” he explained.
“[T]hose are all … spaces that we have innovated, and … brought tooling inside the four walls of Capital One. And the idea is to try and figure out which ones make the most sense to take out and we are still incubating those ideas as we chat with customers.”
Tested and tried, in-house
At first glance, the creation of a B2B software business certainly looked like an interesting and bold step to take for a bank often known for its credit card TV commercials. However, Raghu said that one of the unique and differentiating factors about the solutions built by Capital One Software is that their largest customer is Capital One itself. “[I]t gives me personally the confidence to go out and tell the customer … ‘I actually know this is valuable, because we are using it ourselves.’”
The size and scope of the effort and investment they’ve put into this venture certainly lends weight to that statement; other solutions may thicken the plot even further.