Capital One 2008 Annual Report Download - page 28

10
The companys General Counsel is the accountable executive for monitoring and controlling legal risk and serves as the Risk Steward.
The Legal department serves as our control against legal risk by providing legal evaluation and guidance. This evaluation and
guidance is based on the assessment of Legal counsel as to the type and degree of legal risk associated with internal business area
practices and activities, and of the controls the business has in place to mitigate legal risk. When Legal becomes aware of any risk that
falls outside of acceptable risk assessment limits, there is an internal escalation process to ensure appropriate executives are made
aware of that risk in a timely manner. In addition, we holistically review our legal risk position each quarter with the Legal Risk
Steward, other senior executives, and the Audit and Risk Committee of the Board of Directors.
Technology / Systems
We leverage information technology to achieve our business objectives and to develop and deliver products and services that satisfy
our customers needs. A key part of our strategic focus is the development of efficient, flexible computer and operational systems to
support complex marketing and account management strategies and the development of new and diversified products. Our
commitment to managing risk and ensuring effective controls is built into all of our strategies. We believe that the continued
development and integration of these systems is an important part of our efforts to reduce costs, improve quality and provide faster,
more flexible technology services. Consequently, we continuously review capabilities and develop or obtain systems, processes and
competencies to meet our unique business requirements.
As part of our continuous efforts to review and improve our technologies, we may either develop such capabilities internally or rely on
third party outsourcers who have the ability to deliver technology that is of higher quality, lower cost, or both. Over time, we have
increasingly relied on third party outsourcers to help us deliver systems and operational infrastructure. These relationships include (but
are not limited to): Total System Services Inc. (TSYS) for processing services for Capital Ones North American and United
Kingdom portfolios of consumer and small business credit card accounts, Fidelity National Information Services (Fidelity) for the
Capital One banking systems, and IBM Corporation for management of our North American data centers. In the first quarter of 2008,
we migrated our United Kingdom credit card portfolio to the European version of the TSYS processing platform.
During the first half of 2008, we completed the conversion of the legacy North Fork banking systems to a single platform hosted by
Fidelity. We are in the initial stages of assessing the potential impact of the proposed Chevy Chase Bank F.S.B., acquisition on our
systems and technology. We expect the Chevy Chase Bank F.S.B. acquisition to close in the first quarter of 2009 and we expect to
complete integration planning in mid-2009 and to begin the subsequent migrations later in the year.
Funding and Liquidity
A discussion of our funding programs and liquidity has been included in Item 7 Managements Discussion and Analysis of Financial
Condition and Results of OperationsLiquidity and Funding.
Competition
As a diversified bank that markets credit cards and consumer and commercial financial products and services, we face intense
competition in all aspects of our business from numerous bank and non-bank providers of financial services.
We compete with national and state banks for deposits, commercial loans and trust accounts and with savings and loan associations
and credit unions for loans and deposits. We also compete with other financial services providers for loans, deposits, and other
services and products. In addition, we compete against non-depository institutions that are able to offer products and services that
were typically banking products and services. In general, in the current economic environment, customers are attracted to depository
institutions that are perceived as stable, with solid liquidity and funding.
We compete with international, national, regional and local issuers of Visa® and MasterCard® credit cards, as well as with American
Express®, Discover Card® and, to a certain extent, debit cards. In general, customers are attracted to credit card issuers largely on the
basis of price, credit limit and other product features, and customer loyalty is often limited.
In motor vehicle finance, we face competition from banks and non-bank lenders who provide financing for dealer-originated loans.
We believe that we are able to compete effectively in our current markets. There can be no assurance, however, that our ability to
market products and services successfully or to obtain adequate returns on our products and services will not be impacted by the
nature of the competition that now exists or may later develop, or by the broader economic environment. For a discussion of the risks
related to our competitive environment, please refer to Item 1A. Risk Factors We Face Intense Competition in All of Our Markets.