Capital One 2009 Annual Report Download - page 21

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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, the servicing of our customers, 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 acquire 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.
The Card division has a program in place to address systems changes associated with the Credit Card Accountability Responsibility
and Disclosure Act of 2009 (the “Credit CARD Act”), including the recent clarifications from the Federal Reserve. We are on track to
meet all systems changes required by the first quarter of 2010.
We also remain on target to complete the systems integration of Chevy Chase Bank in the third quarter of 2010. Additionally, a multi-
year effort is underway to build a scalable banking infrastructure.
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 financial institution 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 our Auto Finance business, 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.”
Intellectual Property
As part of our overall and ongoing strategy to protect and enhance our intellectual property, we rely on a variety of protections,
including copyrights, trademarks, trade secrets, patents and certain restrictions on disclosure and competition. We also undertake other
measures to control access to and distribution of our other proprietary information. Despite these precautions, it may be possible for a
third party to copy or otherwise obtain and use certain intellectual property or proprietary information without authorization. Our
precautions may not prevent misappropriation or infringement of our intellectual property or proprietary information. In addition, our
competitors also file patent applications for innovations that are used in our industry. The ability of our competitors to obtain such
patents may adversely affect our ability to compete. Conversely, our ability to obtain such patents may increase our competitive
advantage. There can be no assurance that we will be successful in such efforts, or that the ability of our competitors to obtain such
patents may not adversely impact our financial results.