Capital One Financial Corporation

Contact:
Capital One Financial Corporation
2980 Fairview Park Dr
Falls Church, VA 22042
http://www.capitalone.com

Tools Used:
CORBA®, IONA's Orbix™, Java™, Unix, C++, IBM MQSeries messaging systems, Oracle DBMS Persistance mapping software, Netscape Navigator™

Description:
Are today's object technologies ready to handle huge, crucial, transaction-intensive applications? Capital One Financial Corporation has that answered in September of 1997, as the company went live with an object-based business application that processes all daily transactions of its nearly 10 million cardholders.

The system, expected to handle millions of transactions on a daily basis, is the first in a series of events that will eventually represent a complete overhaul of the Falls Church, Va., company's core business systems. Over 1998-2000, a hodgepodge of IBM and Unisys mainframes, client-server and desktop applications, will be replaced by a distributed, three-tier architecture based on standards: the Common Object Request Broker Architecture (CORBA), Unix, C++, Java and Web browsers.

Formed in 1989 when Signet Bank spun out its credit-card business, Capital One has rapidly become one of the nation's top 10 credit card issuers. In 1997 alone, its customer base grew 40%. But the company's existing technology "was a barrier to further growth," says Tal Elyashiv, a Capital One IT director. The company didn't see itself as only a credit card company. Capital One also has a fledgling cellular phone business, and they expect to expand into other businesses, too. "We are a company wrapped around strategy," says Matt Cooper, Capital One's senior VP of business development.

The strategy is collecting, analyzing, and acting on information. Capital One focuses heavily on what it calls "testing"-or devising new financial products, typically credit cards with some new twist, such as a different interest rate, then mailing a sample to potential customers. The tests are usually devised by mining the company's data warehouse for trends. The response to each test helps Capital One decide which products to develop and use more widely. The strategy has been extraordinarily successful: In the maturing credit-card business, Capital One has grown from about one billion dollars in customer accounts in 1989, to almost twelve billion dollars in 1996.

Capital One won an Excellence in Technology award from IT advisory firm Gartner Group for its matching of IT to business goals, and for efforts few other companies have made "to this degree and with this degree of success," says Jack Cooper, VP of IS at Bristol-Myers Squibb in New York and a member of the Gartner award jury.

But the company's existing IT strategy was running out of steam. In 1989, Capital One conducted 300 tests of new financial products. By 1996, the number had grown to more than 10,000. The existing systems weren't flexible enough to deal with anticipated increases in testing. "If one of the business parameters within which we operate changes, we can't wait a year to change our systems," Elyashiv says. "there's only a small window of opportunity in which we need to get new products to market."

It was clear that the existing systems needed to be replaced. But object technology wasn't Capital One's first choice. Originally, IT staff tried to build a database-centric system. But that quickly proved unfeasible. "We realized that with a data-centric approach, we wouldn't get the kind of flexibility we wanted," Elyashiv says. The company decided that object technology, in contrast, would allow a move to a component-based architecture that would enable its systems to change rapidly with business conditions. The way ahead seemed clear. "Then reality set in," continues Elyashiv, "we realized that distributed objects were wonderful, but the state of the technology is such that there is a tremendous amount of risk."

To minimize the risk, Capital One decided to build on object standards, such as CORBA, and build new applications using an iterative, incremental prototyping approach. As the project progressed, the prototypes gradually became production code. To further reduce the risk, the company built an "isolation layer," software that separates its business objects from the supporting infrastructure while standards emerge.

Capital One's software relies on Orbix, an object request broker from Iona Technologies in Dublin, Ireland, together with Iona-developed naming and security services. But Capital One found it also needed other types of middleware; IBM's MQSeries messaging software for its guaranteed delivery between system components, and a transaction monitor - Transarc Corporation's Encina - for transactional capabilities such as rollback. Linking these products meant more work. "These products are written with the assumption that you only need one of them," says Elyashiv.

Capital One wrote the server-based software in C++ for deployment on Hewlett-Packard and Sun Microsystems application and database servers. It wrote the client software in Java. Users will access the systems with Java-compatible Web browsers on Microsoft Windows clients. Capital One plans to continue its iterative development process, where it keeps rebuilding prototypes and learning from them, even as the first application goes into production.