CaptialOne Café, The Reinvented Bank Branch?

M.S. Kirkpatrick
Mar 5, 2019 · 7 min read

CapitalOne’s desire to “unbank” the brand by launching several café model branches, designed to be warm and inviting environments without any high-pressure sales, is an interesting idea. However, we have a few in Boston and having visited recently, I didn’t exactly know what to make of it.

When Capital One bought ING Direct in 2012, the deal included ING’s Orange Cafés. 18 years ago ING opened its first café in the United States in New York City, after successes in Canada, Australia, France, Italy, and Spain as an attempt to create a new experience with customers. With that history as a backdrop, it’s interesting to see the buzz these days around Capital One. Coffee and its service is provided by Peets, Wi-Fi is free, and pastries are from local purveyors, a nod to Millennials who like to support their neighbors. Though it’s not required for purchase, Capital One cardholders get a 50% discount on drinks.

And they have steadily expanded on the idea over the years with 30 café branches in the United States now, after inheriting 11 total in the US and Canada in the purchase. Clearly, there is something about the bank/café model that is working for CapitalOne.

It certainly is time to retool the branch if not outright question its existence. The bank branch experience hasn’t changed very much over the years and feels as outdated as a fax machine. And this is in an era where retail giants like Apple have raised the bar for in-store experiences. While the comparison is a little unfair, we can look to the retail sector for some insight into consumer behaviors in understanding what the branch experience should be and if CapitalOne’s café strategy is in sync with the approach of leading retailers.

One factor retailers acknowledge and design for is the evolution of the shopper’s journey. Nowadays the shopper’s path to purchase increasingly crosses between physical and digital worlds. Retailers are working to devise seamless omnichannel experiences to best serve these changing behaviors. Today’s shoppers are looking for a stress-free shopping experience that supports an increasing desire to visit the physical store to “test drive” products firsthand and prior to price-comparing and purchasing — behaviors which are moving increasingly online. With packaged goods, this makes a lot of sense but with products like mortgages, loans and other financial products it’s a little more complicated. Because these products are intangible and complicated, having human beings standing by to help simplify things and to answer questions is a winning strategy that nicely aligns with consumer preferences.

So, what do the people that visit these cafes think?

I asked an appropriately scruffy young man sitting at a beautiful (walnut?) table sipping coffee out of a ceramic mug while flicking the trackpad of his Apple laptop. “I come here to do some work as a change of venue… There’s more space and more tables here — Starbucks is further away and always too crowded.” When asked if this felt like a reinvented bank, he chuckled slightly, “I have no idea. Sort of… If I needed help with bank stuff I guess I would ask…” motioning to a CapitalOne expert nearby.

The relaxed atmosphere and aesthetic is the draw and the banking is an afterthought or not a thought at all for those camped out with headphones and laptops. It’s an alternative to Starbucks or Café Nero and that feels like what CapitalOne is going for — but is it sustainable as a business investment I wonder? “It’s a good concept… Coffee is an everyday ritual”, I overheard an equally intrigued visitor mention to one of the CapitalOne folks standing by. To me it’s reminiscent of the old digital strategy from the early 2000’s: get people to your website and the economics will work themselves out.

Another key success factor for CapitalOne to contend with on something billed as “reinvention” is their reputation as reinventor. I have no doubt consumers want a reinvented relationship with banking and financial services. That’s been proven by the scores of successful fintech companies across wealth management, lending and payment sectors. Payment companies Paypal (now an eBay co.) and Venmo have had great success delivering a reinvented way to pay and share money and others have since followed by rethinking savings, checking, bill paying and various other components of the banking experience.

It’s not surprising that many of the innovators that provided new and reinvented solutions to the market were not incumbents like Bank of America, Citi, JPMorgan or others. Generally, consumers are more open to invention from a fresh new company that can authentically claim they’ve looked at the situation in an entirely new way. These disruptors can step into an industry and say to the market leaders We’ll take it from here without a legacy of brand perception to overcome. In a recent banking survey of millennials, 75% say they’d be more excited by a financial offering from Google, Apple, PayPal, or Square over their nationwide bank. CapitalOne’s success at reinvention of the branch goes beyond just convincing people to “bank differently”. In some ways, they’re also asking customers to believe CapitalOne, in its 31st year, is a company with the perspective required to truly reinvent the branch.

Few established brands or companies succeed at convincing consumers to believe in a new ethos without a long campaign of demonstrated successes that earn incremental trust while demonstrating a true commitment to change. Apple could never have released the iPad — a device about which David Pogue said “I don’t know what I need this for but I’m buying it anyway.” — without the prior wins with consumers (Mac, iPod, iTunes). Consumers are savvy, and these announcements are often met with skepticism. Skepticism drives behavior and can be a wet blanket on even the strongest of ideas. So CapitalOne’s claim at reinventing the branch is brave but I’m not sure they’ve earned that opportunity in the hearts and minds of consumers which may impact how much actual commerce happens over the piping hot cups of Peet’s™.

Incumbent brands should not give up and stick to the status quo. They need to account for the brand perception they have cultivated when developing innovation strategies. This perception of “steady sameness” and lack of innovation and change is a real barrier to success. If you’re going to earn the right to be different, that will take time and investment and you need to give consumers what branding experts call a “reason to believe” — that is, why is now different? What’s changed?

In other words, why is CapitalOne uniquely positioned to do these cafes and why are they a strong idea for banking? I don’t see this incorporated into CapitalOne’s strategy and that may hamstring adoption of this model especially if Amazon, a company with a solid track-record of innovation, decides to enter the market with a physical presence. And with 500 Whole Foods stores, this is a rumored and real possibility.

The final and perhaps most challenging issue I see here is something that’s been a scourge for the banking industry for years: a lack of transparency. Let’s get real — most banks (especially the big boys) are seen as untrustworthy by the public. There is an inherent “You’re screwing me, I just can’t figure out how” sentiment amongst most consumers that has led many — especially millennials — to explore new ways to move, lend and manage their money. Digital upstarts have emerged such as Ally, Moven and Aspiration and a slew of many others to serve this appetite to defect. I spoke to one of the CapitalOne employees on a return visit. He had the kind of pleasant nature and friendliness that is clearly recruited for, “Sometimes when people come in and I’m up front, I will say hi and…” (holding up his hand) “They’ll say ‘I’m all set’. They think I’m trying to sell them when I’m really just saying hi!”

Looking at the CapitalOne café through a filter of trust and transparency, customers might interpret cafés as a dishonest misdirect. It could appear like a tactic of plying customers with coffee while masking the real intentions. “Are they watching what websites I visit on the free wifi?” Because the strategy is so unconventional — and the reputation of banking is so poor — it could be seen as a trick, even if it isn’t. Customer perception is a real and serious challenge.


I paid for my coffee and sat for a while surveying the beautifully appointed surroundings. Lots of wood, leather fabrics and just the right level of designer lighting all created a mood that absolutely had me wanting to spend time here. As I sat contemplating “Where are we going with this?” I couldn’t help but root for this to work.

CapitalOne is to be commended for doing something so odd and courageous (and not at all inexpensive). They must do something to stay relevant and compete as do the all large, national banks. Behaviors are changing. They may be ahead of the market here and we will all soon discover how natural this marriage of lattes and loans is. If these cafes truly do create a new experience paradigm that customers love, they will have earned the right with consumers to try many more innovative moves in the future.

Written by

Design, UX, Financial Services — I work @MadPow and head up Client Experience and the Financial Services practice.

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