In consumer lending, every product is evolving in the same direction as credit cards-toward large, national-scale consolidators replacing local, face-to-face lending. That evolution has happened in credit cards. It 's well under way in auto finance, mortgages, and home equity. Its coming more slowly in installment lending. So consumer lending, a major part of the asset side of banking, is all flowing toward national consolidators like Capital One. -RICHARD D. FAIRBANK,
CEO AND CHAIRMAN, CAPITAL ONE FINANCIAL CORPORATION '
United Kingdom, the Hfs Group, to strengthen its Global Financial services (GFS) subsidiary in the British market. As of April 2005, it possessed sufficient liquidity ($21 billion) and capital ($9.2 billion)4 to
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Between 1994 and 2004, the company grew at an annual compound rate of 29 percent/ both in terms of its EPS and the number of customers. In 2004, its earnings were $1.5 billion, and the EPS was at $6.21.8 At the end of 2004, the company and its subsidiaries held 48.6 million accounts and $79.9 billion9 in managed loans outstanding, which grew by 12 percent ($8.6 billion) over the previous year (see Exhibit 1). It had 17,760 employees in March 2005. The bank offers 7,00010variations of its MasterCard and Visa cards, each one is customized to appeal to different customer preferences and needs by combining product features such as different backgrounds and colors, along with varied annual percentage rates, credit limits, fees, and rewards programs. Capital One 's pricing strategy is based on the risk level of its customers. It offers platinum and gold cards to its preferred customers with excellent credit history and a wide range of secured and unsecured cards to customers with limited or poor credit history. The company also provides a range of consumer products like auto finanCing, mortgage services, credit insurance, and home-equity loans. Customizations of credit cards at Capital One are made with the support of its
Fall 2009 This case was prepared by Itir Karaesmen and Inbal Yahav of Robert H. Smith School of Business at University of Maryland, College Park. The names, locations, and other information included
* Capital One can address a much wider group of potential credit card customers, offering credit facilities to individuals who traditional card companies regard as high risk
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Richard Fairbank and Nigel Morris, both diligent entrepreneurs, started laying the bricks for their eventual successful company, Capital One, in the late 1980’s. They both worked in the Virginia-based “Signet Bank”. Fairbank started noticing trends in the financial industry that he felt Signet was missing out on. These opportunities were in the credit card industry. He, as well as all of Signet Bank knew that the credit card industry was very risky, but Fairbank was ready to take a chance in this, what can be, highly profitable field.
Capital One is a banking company that is focused on credit cards and consumer loans. The company also has some minor international operations in Canada and the UK, primarily in the credit card business. The company breaks down its business as follows. Credit cards are the major source of income, accounting for $10.4 billion in revenue, or 64% of the total revenue for the company. Consumer banking accounts for 31% of the revenue, commercial banking a further 10% of the revenue, and the company has negative revenue on "other" businesses. The credit card business is the most profitable, generating $2.277 billion in profit, or 70% of the company's total net income. Consumer banking accounted for 25% of total net income, while commercial banking accounted for 16% of total net income.
The banking industry has undergone major upheaval in recent years, largely due to the lingering recessionary environment and increased regulatory environment. Many banks have failed in the face of such tough environmental conditions. These conditions
The Case Study is provided by the Harvard Business School and is considered necessary reading prior to the understanding the responses contained herein. This paper is
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My term referee for BTEC Level 3 90 credits Diploma in Business Unit 1 D1, The Business Environment is Uzma Mirza and she is my lecturer from the Business School at Uxbridge College. This report needs to be completed by Friday 20th March 2015. The main purpose to write this report is to show my understanding about the influence
Capital One was founded on the vision Richard Fairbank and Nigel Morris had regarding the potential profitability that could be made from customizing credit card products based. “Capital One now is one of the largest issuers of master card and visa credits in the world.” Recently, due to a new marketing campaign, Capital One predicts an increase in demand for fund loan approval. Based on the current levels of capacity, the loan department will not be able to accomplish their targeted goal of 700 applications per month. Our proposed plan is aimed at accomplishing a higher level of utilization and capacity through modifications on the current loan approval process. Since