Capital One Cafés: Coffee Shops or Bank Branches?

When Capital One took over ING Direct, everyone wondered what would happen to the signature Orange Cafés that came as part of the deal. Would they be phased out? Converted back into traditional branches? Nope. Capital One loves their cafés... and more locations are on the horizon.

The basic idea behind a Capital One Café is pretty simple: combine a Peet’s Coffee shop with “digital lifestyle coaches” that can help customers with their online banking services.

At the cafés, customers can get answers to questions and manage their finances in a casual, relaxed atmosphere. The expansive open layout is “designed to facilitate discovery, conversations, hospitality, education, and community events,” as Ryan Laudenbach, Seattle Market Lead for Capital One Cafés, explains it.

There are communal tables and lounge chairs, meeting rooms that anyone can reserve, free Wi-Fi and power outlets, and video teller ATMs that are fee-free for everyone, not just cardholders. (Update: Capital One now charges a fee for non-customers.)




Since Capital One bought ING Direct USA back in 2012, the spaces have been redesigned to reflect trends in tech office design, with treatments like exposed ceilings and natural wood textures.

“The space looks so much cooler, cleaner,” explains Antonio Wilson, Capital One’s Chicago Café Coach. “It makes you feel like you’re inside a digital website with a café, and friendly people from a community.”

The goal of the cafes is simple, says Wilson says: It’s about building new customer relationships and retaining existing ones.

“Our goal as a company is to reimagine banking in a different way,” Wilson said in an interview with the Real Estate Journal. “The goal is to get people to come in for coffee or pastries. This is not a place where they feel like they are instantly going to have a banker in their face talking about our products. So initially, people use the site as a full-fledged café. Over time, though, they might bring up the conversation with our on-site bankers about our products.”

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Capital One has a long-standing partnership with Peet’s Coffee, a national coffee chain, to serve espresso and other hand-crafted beverages in the cafés. If you’re a cardholder, you get 50% off your drink order. Peet’s provides the coffee and pastries and hires the workers to staff the cafe area.

Mike Friedman, market lead at Capital One, says the strategy is all about preserving that face-to-face connection that consumers still seem reluctant to relinquish when it comes to their banking relationships. “It’s a lot more than just providing the community a coffee shop,” Friedman says. “It’s about allowing the café to provide those human connections.”

“Our customers expect the digital tools allow them to bank wherever they are,” Friedman continues. “But they also expect to have a person to talk to when they need it. The cafes are a unique opportunity to present a physical manifestation of our brand and take this as an opportunity to connect with customers on their terms.”



Committed to Cafés: Capital One Doubles Down

Following Capital One’s acquisition of ING Direct USA, there was much speculation as to whether Capital One would really continue operating these “un-branches.” But they aren’t just keeping the ones they inherited alive; they are doubling down. Indeed, Capital One’s expansion plans for the café concept are more aggressive than those of ING Direct, who seemed content to open roughly one new location about every 6-12 months. Based on The Financial Brand’s research, it looks like Capital One will be opening about a dozen new cafés in the coming year. They have more locations planned for cities across the U.S., including Boston (where they already have six), Seattle, Denver, Richmond and South Florida.

You have to wonder: Would Capital One really continue building these cafés if they weren’t working? After all, the café isn’t a new concept. They have been around in one form or another since ING Direct rolled out its first over a decade ago. Capital One has to see greater strategic value in the cafés beyond just the “billboard factor” — generating brand awareness among digital consumers by creating a street presence in the real world.

There are digital zealots in the banking industry who will rush to poo-poo Capital One’s decision as a foolhardy investment in a dead delivery channel. But don’t forget this: Capital One is a publicly-traded company who is held accountable by its shareholders. They probably aren’t looking at their data — 10+ year’s worth — and saying, “You know what? This experiment just isn’t profitable. But what the heck, let’s keep doing it anyway. In fact, let’s do it more.

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