Capital One innovation lab draws attention


Just about all banks are betting on innovation in some way, in an effort to drive demand in new markets such as mobile banking and in traditional markets, such as the ATM channel. Technology has long been considered the key to unlocking new revenue streams.

To harness this power, Capital One has opened up an innovation lab in the suburbs of Washington DC. The head of the lab, Mark Jamison, has drawn attention for his thinking about "how best to turn the slow, sluggish machine of banking into something that looks more like Apple's iOS -- a platform," according to Bank Technology News.

Such a platform will hopefully allow the bank to derive revenue from a host of partners that would essentially be tapping into the bank's technology. Already, Capital One has developed four API sets, one of which would allow access to the bank's authentication tools, which I've suggested could emerge someday as a huge revenue driver across the industry.

Another API allows access to a rewards program, which might be used by third-parties to offer a wide range of transactional and marketing features to bank customers. Some apps will no doubt take advantage of geo-location capabilities, which the bank thinks will be key to some services.

"Even when it came to figuring out where to best locate the lab locations and hire employees, Capital One mapped centers of entrepreneurship relative to venture capital and angel tech investment…The bank opened its innovation lab in Arlington, Va., one of three locations where the bank is conducting tech experiments, last year," Bank Technology News noted.

In the end, the work performed at the innovation lab can't be considered basic research. It's very much an applied research initiative. So at some point, management has every right to expect a return on the investment.

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