Capital One looked to technology to help navigate economic uncertainty as it invested in machine learning during the first quarter. 

The $471 billion bank saw a 3% year-over-year increase in communications and data processing to $350 million as the bank used machine learning (ML) to assist in making business decisions based on market sentiment, Capital One Chief Executive Richard Fairbank said during Thursday’s earnings call.

 “We use all of our modern and machine learning-based monitoring tools to identify little pockets that might be [varying] from expected performance or prior performance or anything like that,” he said.

WHY IT MATTERS: McLean, Va.-based Capital One decreased its total noninterest expenses by 3% YoY, as the bank’s marketing expenses fell 20% and operating expenses increased 2% sequentially, according to the earnings release. 

Despite declining noninterest expenses, the bank remained steadfast in its digital efforts, including ML, Fairbank said. “Our modern technology capabilities are generating an expanding set of opportunities across our businesses,” he said. “We are driving improvements in underwriting, modeling and marketing as we increasingly leverage machine learning at scale.” 

THE BIG PICTURE: As Capital One reported lessened expenditures and a continued focus on technology, the bank’s revenue fell for the second straight quarter by 2% to $8.9 billion, according to the bank’s earnings release. 

BY THE NUMBERS: Capital One reported for Q1: 

• Net income declined by 60% YoY to $960 million;  
• Operating expenses increased by 11% YoY to $4 billion; and 
• Occupancy and equipment expenses fell 1% YoY to $508 million. 

NOTEWORTHY: Capital One is working to improve its customer experience through technology, Fairbank said during the call, noting the bank is “transforming the customer experience in banking, and our tech engine drives growth, efficiency improvement and enduring value creation over the long term.” 

Capital One’s investment is going toward product upgrades such as implementing performance dashboards to help manage cloud costs, a service update released by the bank in September, per Capital One’s website. 

FUTURE LOOK: With a more negative economic outlook expected for the rest of the year, Fairbank reiterated that the bank would not back off from its tech transformation initiatives as banking moves toward digital. 

“The future of everything in banking is digital. And with each passing quarter, banking is accelerating toward its inevitable destination,” Fairbank said. “Capital One is at the vanguard of a very small number of players who are investing to build and leverage a modern technology infrastructure from the bottom of the tech stack up to truly transform technology and put themselves in an advantaged position to win as banking goes digital.”

[stock_market_widget type=”card” template=”basic” color=”#5679FF” assets=”COF” display_currency_symbol=”true” api=”yf”]