One of the new Capital One Cafés

A New Banking Experience Thanks to Human Centered Design

How Capital One’s new cafés provide a real-time case study into the innovation imperative in banking.

I’m writing this post in one of the new Capital One Cafés (with operator Peet’s Coffee grinding the beans). After walking by these new stores for a few years now, the one I finally happened to try is a former Wagamama location (Alas! One of my favorites!), in a trendy shopping center in the suburbs north of Boston. The store has plenty of light, high ceilings, and a clean, contemporary vibe.

The emergence of these new banking experiences is not breaking news. Although this café was opened in January 2017, these new hybrid stores have been popping up in mostly urban areas for the last few years. I’m sure you’ve seen the commercials:

Because this is my first visit to these new bank cafés (Bankés? Anyone?), I can report some pleasant surprises:

  • Drinks are always half-price if you pay with a Capital One debit or credit card.
  • Beyond the typical-yet-plentiful cafe tables, this space includes some work nooks, a conference room and a flexible work/meeting space to be used for small business and non-profits (Even the nextdoor Apple Store holds regular team meetings in the space).
  • The banking associates and the baristas seem to work together like they are all part of the same company. Maybe they are?
  • Speaking of the team on the floor, everyone is young, friendly and helpful. I had a nice chat with an associate who walked me through the space, shared insights on how its been used so far, and recounted how the café experience seems to be driving potential bank customers to sign-up and do their banking here.

Peet’s Coffee serving up half-priced drinks for Capital One customers.

Right now, late in the workday, the space is pretty quiet, with a few people tapping away on laptops and sipping their lattes. As a mobile worker and frequent patron of coffee shops and flexible work spaces, the relative peace and quiet is a welcome respite from the hustle and bustle of the typical Starbucks or trendy hotspot. For reference, by my eye, the Starbucks a few doors down has half the floorspace, and currently four times the customers traffic and almost none of the seating availability.

I watch (Not eavesdropping! I have my Bose noise-canceling headphones on) as a bank associate welcomes a customer to the workbar, offers a drink, and guides him through the sign up for a banking account on a custom Capital One iPad.

Seeing this process unfold hints at the question that Capital One might have asked themselves before engaging in this transformation: “What might the future of banking look like?” Or even more importantly, “What might the banking customer of the future (read: Millenials) want in a bank location?” Frankly, the future success of large banks may hang on successfully answering these very questions.

It quickly becomes clear that these stores are really at the heart of what is essentially a live case study in business transformation, viewable in real time. While these cafés have been in the works for quite a while, Capital One seem to be pretty open about sharing how they are approaching these challenges.

Indeed, my hard-nosed research (read: a quick Google search) on Capital One reveals, among other things, that in recent years they have launched an in-house startup accelerator within the company called Capital One Labs, that seems to be a combination of an internal innovation consultancy and a new product and experience incubator (locations in NY, SF & DC). To complement the Labs, Capital One acquired the digital experience firm Adaptive Path in 2014.

Browsing through the Labs Blog and the Adaptive Path website, it is quickly apparent that they are relying on innovation methodologies such as human-centered design (a.k.a. HCD or more commonly, Design Thinking), that are being used all over the world to drive innovation through an integrated approach to user experience, service design and branding.

So how do I think Capital One is doing in using HCD to answer these existential questions about the future of banking? I have to admit, while it may feel a bit forced at first, I think they’re on to something. Logic tells us that the company must be bullish on the approach, having now opened more than 20 cafés nationwide.

Clearly there are some big advantages to this new approach: If customers are coming less and less to traditional bank branches, they are inviting them to a place that customers ARE willing to come to: coffee shops. With new and consistent foot traffic and retail utilization, they can incentivize the conversion to bank customers (half-priced lattes, anyone?). And finally, they can engage and guide their millennial customers in the place they actually WANT to do their banking: on the next generation of apps for digital platforms like iPhones and iPads.

Of course, there are plenty of challenges for the bank to overcome. Can potential customers break their long-held preconceived ideas of what banks and cafés should be? Can the potential long-term benefits outweigh what must be a significantly higher operating cost for each location? Can the bank convert enough revenue-generating customers and/or wait until these millennial customer build their assets to make a difference to the bottom line?

Time will certainly tell, but it’s about time a large bank is trying a convention-busting approach to retail banking. I, for one, am impressed both by their ability to execute as demonstrated by my experience today, and their innovation-driven strategy to answer the existential questions they face. Capital One, you’ve got my attention.

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