Capital One is modernizing its tech stack and increasing automation using machine learning (ML) within the bank’s systems. 

The $444 billion bank reported a 9% year-over-year increase in communications and data processing spend to $349 million during the third quarter, according to the company’s Q3 earnings presentation. The technology-focused investment will allow Capital One to pursue additional growth opportunities moving forward, Chief Executive Richard Fairbank said during Thursday’s earnings call.

“Beneath the surface of the high level of investment has been significant productivity gains from modernizing our tech stack, eliminating legacy vendor costs, driving customers to digital and driving more automation in the company,” Fairbank said. “At the same time, of course, we have continued to lean into this technology journey and the opportunities that it generates, so it’s a very shared path.” 

Capital One reported for Q3: 

• Net revenue increased 12% YoY to $8.8 billion; 
• Noninterest expenses in the business segment grew 18% YoY to $4.9 billion;  
• Commercial banking noninterest expenses increased 18% YoY to $542 million; and 
• Noninterest expenses in consumer banking rose 13% YoY to $1.3 billion. 

The bank’s noninterest expenses increased due to “continuing investments in the digital capabilities of our auto and retail banking businesses and the increased marketing for our digital national bank,” Fairbank said.

While Capital One did not break out technology in its earnings supplement, the bank credited an increase in tech spend to building ML-based capabilities into its credit underwriting process for portfolio management and fraud detection, according to Fairbank. The bank continues to look for potential fintech acquisitions or partnerships heading into 2023, Fairbank previously said during the company’s Q2 earnings call. 

“Our growth opportunities are enhanced by our digital transformation,” he said during the Q3 earnings call. “We continue to closely monitor and assess competitive dynamics and economic uncertainty. Powered by our modern digital technology, we’re continuously improving our proprietary underwriting, marketing and product capabilities.”