Rob Alexander is not afraid of a challenge. After joining then-10-year-old Capital One Financial Corp. as a business executive in the company's credit card organization, he accepted a series of challenging assignments, culminating in his leadership of a successful overhaul of Capital One's credit card core infrastructure. Now Alexander, who was named CIO of the McLean, Va.-based bank in 2007, is embracing even bigger challenges as he facilitates Capital One's ($199.8 billion in total assets outstanding) aggressive growth strategy while also upgrading its enterprise infrastructure and improving the customer experience in an increasingly digital multichannel delivery environment.
When Alexander says, "We're a company that's growing, ... so being able to scale to support that growth is really an important objective," it's a bit of an understatement. Within the past four months Capital One (which recently completed the integration of 2008 acquisition Chevy Chase Bank) announced its intentions to acquire both ING Direct US in a $9 billion deal and HSBC's domestic credit card business for about $2.6 billion. If approved, the ING Direct acquisition would make Capital One the fifth-largest U.S. bank and the biggest direct bank. Apart from the sheer systems integration demands, all three of these transactions require Alexander's IT team to address some of the most critical issues in banking today: infrastructure, availability and customer experience.
Ultimately, Alexander says, his most important responsibility -- and greatest challenge -- is ensuring that Capital One's IT organization consistently "delivers, with great execution, the investments that support our business." "Our businesses have a huge appetite for IT spend. It is how they innovate, how they create new products," he explains. "I came out of the business side; I didn't grow up through technology, so I have a good understanding of our business strategy and the pressures our business leaders face. I'm able to bring that perspective to how we lead our IT organization."
"Always On" is the phrase Alexander uses to describe his priority of "creating a reliable infrastructure, making sure every single day we're delivering great reliability in our systems." To achieve this, the bank is simplifying its infrastructure -- eliminating redundancies, standardizing on specified applications and technology partners, and introducing more virtualization.
According to Alexander, one of the first things he did when he became CIO was examine the scope of Capital One's IT operations. What he found, he reports, was "quite a scattered footprint" with close to 30 different facilities of varying sizes and scope. Today that has been consolidated down to two primary data centers.
With facilities rationalization in place, Alexander then was able to focus on standardization, launching the Blueprint program, which "defines a set of standard technology stacks, from the hardware layer and operating systems [to the] database layer," allowing the bank to "provision and manage them in a much more automated way," he explains. Alexander says the approach could be considered an internal, private cloud, but adds that Capital One currently is not "aggressively using multi-tenant outsourced-type of cloud-based models." As reliability and security improve, the cloud will be an increasingly attractive option, Alexander predicts. "Over time, the economics of that are going to be extremely compelling, ... particularly [for] the non-core, non-critical kinds of applications."
Some of the IT rationalization at Capital One was accomplished through the Chevy Chase Bank integration, which also provided experience that will be essential once the ING Direct and HSBC credit card acquisitions are confirmed, according to Alexander. Capital One's "disciplined approach" to integrations begins with "making sure we have the right governance structure in place to manage it," he relates. "A lot of it is about change management and the people as well as the nuts and bolts of getting it done."
It's important to specify the desired "end state" of an integration, Alexander adds. "These aren't just, 'Bolt something on.' We're really looking at: How do these integrations fit with where we're trying to go as a company? What do we want the architecture to look like? How do we want the capabilities, and what this company offers, to be integrated? Then we build toward that."
In addition to expanding Capital One's presence in the Washington, D.C., market, the Chevy Chase Bank integration gave the bank the opportunity to consolidate several systems so that the entire company would be on "the same deposit platforms and the same branch platforms," Alexander says. As a direct bank, ING Direct will present Capital One with some different opportunities (and challenges), he points out. "We're ... putting the highest premium on customer experience," Alexander notes. "We need to … preserve and build on the [ING Direct] franchise, that focus on the customer experience. That's the highest principle in terms of how we plan to manage that integration."
Creating a 'Compelling' Experience
Ultimately, Alexander says, the ING Direct integration will provide a way to execute on another high-priority agenda item: providing a "compelling customer experience," in part through increased investment in the digital and mobile channels. "We have really ramped up our focus on [customer experience]," he reports, "and the ING Direct integration is going to be a nice complement to that."
Capital One must address the "big shift going on in terms of how customers want to do business," Alexander stresses. "We want to be well-positioned for that channel migration." But it's not just about cool interfaces and tools. In fact, he argues, the most important aspects of customer experience happen in the data center.
"People jump beyond this, but the foundational thing in delivering a great customer experience is to have reliable systems," Alexander says. "Your systems have to be up and running every day. When your customer calls your call center or goes online and you have an outage, that is a bad customer experience. So this emphasis on 'Always On' is first and foremost a customer experience mission, making sure we deliver great systems reliability so our customers can do business when they want to do business."
Accordingly, Capital One is investing in creating a more integrated customer experience across products and channels. "That really is driving how we think about architecture," Alexander reports. "It's driving our SOA [and] middleware model. It's driving how we think about channel solutions. ... This whole notion of building that more integrated capability is really driving our approach to technology architecture."
Nowhere is the drive to bring together channel convenience, interface and operational performance more prominent than in mobile, which has been another area of focus for Alexander -- not just for customers but also for the bank's workforce. "It is just remarkable what has happened [with] the explosion in mobile," Alexander says, noting that Capital One has deployed apps for a range of customer devices and platforms. With Capital One's strong foundation in the use of data and analytics -- what Alexander describes as the bank's "information-based strategy" -- the channel presents "a great opportunity to build on those strengths," he adds.
Mobile also is likely to transform payments, which has significant implications for Capital One's cards business, Alexander notes. "It's really a mandate for us. There's a potential for the world to change in the payments space," he says. "We're a leader there. We've got to make sure we're out in front of how that unfolds."
Katherine Burger is Editorial Director of Bank Systems & Technology and Insurance & Technology, members of UBM TechWeb's InformationWeek Financial Services. She assumed leadership of Bank Systems & Technology in 2003 and of Insurance & Technology in 1991. In addition to ... View Full Bio