How Capital One became the first fully cloud-enabled US bank

  • The pivot to the cloud is a major IT transformation that many companies are still grappling with. 
  • Capital One just became the first US bank and one of the only major Fortune 500 corporations to be fully cloud-enabled after exiting its last physical data center, Business Insider can exclusively reveal. 
  • “Many companies might underestimate how comprehensive a transformation this is,” Melanie Frank, the bank’s vice president of technology, said.
  • “It was a cultural shift for us just as much as it was a technology journey,” she added. 
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The pivot to the public cloud is one of the most drastic IT changes to hit corporate America in the past decade. 

But despite all the enthusiasm over cloud computing, the reality is many firms still operate brick-and-mortar data-storage facilities. There are many reasons for this, including concerns over security, the cost associated with the transition, and the lack of a playbook on how to manage what can be a difficult transformation.  

The latter, however, is quickly changing. Capital One recently exited its last physical data center, Business Insider can exclusively reveal, becoming the first US bank to be all in on the public cloud and joining Netflix as one of the few major corporations to earn the distinction. 

It was a journey that the $40 billion financial titan began in 2014 when it partnered with Amazon Web Services. While other financial giants have either moved more slowly or preferred a hybrid approach of maintaining some of their own infrastructure, Capital One said it believed transitioning completely would enable it to more quickly release new products, easily scale up capabilities depending on usage, and reduce failure rates, among other advantages, according to Melanie Frank, the bank’s vice president of technology.

“A cloud-native application looks very different, and to truly take advantage of those capabilities, you really need modern applications and modern architecture,” she told Business Insider. “Being all in on cloud opens up so many more possibilities from an innovation standpoint for the engineers.”

Melanie Headshot 1.2020.PNG

Melanie Frank is the vice president of technology at Capital One.

Capital One


But the transition took more than just an IT overhaul — ultimately affecting the internal dynamics of the company and the makeup of its workforce. Alongside help from AWS, it even got pointers from Netflix on how to successfully pursue the overhaul.  

“Many companies might underestimate how comprehensive a transformation this is,” Frank said. “It was a cultural shift for us just as much as it was a technology journey.” 

‘It is definitely cost-advantageous’ 

Before public-cloud providers began wooing companies, they either had to lease space in a data center or purchase their own, capital investments that can often weigh on the bottom line, especially if dramatic changes to capacity are needed.

Since cloud computing is often charged as a monthly or annual subscription, it’s much easier to purchase more or decrease usage depending on the need. So for a company like Capital One, that ability can come in handy around the holiday season when consumers are spending and it may need increased capacity for its tools.

And because the computing power via the cloud is closely linked to the applications themselves, leadership can more easily track the specific return on investment.

But that doesn’t mean the cloud is always a cost saver. In fact, some companies saw their cloud costs skyrocket during the coronavirus pandemic as more employees worked remotely.

“You have to be smart about how you utilize this capacity. It is definitely cost-advantageous,” Frank said. “It feels so much more empowering to see that total cost of ownership. If I’m going to deliver this value to my customer, here’s what this looks like and here’s the capacity that I need.” 

Read more: Startups that help their customers slash cloud and IT spend are hotter than ever, VCs say. Here are the 10 they recommend.

And while a key concern among many banks is the safeguards available to protect data stored in the cloud, Frank said physical data centers could provide a “false sense of security.”

“We had a lot to do to put controls in place for the cloud, and security in the cloud is definitely different,” Frank said. 

The bank learned the hard way that cloud issues aren’t always the fault of the provider: Capital One suffered a major data breach in 2019, but AWS was not found to be at fault. Rather, the hack stemmed from a vulnerability in the way the bank set up its AWS infrastructure. 

A surge of engineering talent

Internally, the journey to the cloud also had a dramatic effect on Capital One’s workforce, in both the types of employees it has sought and the way technologists worked with the business itself. 

A decade ago, the company was used to outsourcing much of its IT work to vendors. Now Capital One has built an in-house team with thousands of engineers, data scientists, project managers, and others who do much of that work.

While some of those hires came from outside, Capital One also devoted resources to upskilling its employees that were used to working in physical data centers.

“Because we were declarative of where we were headed, arguably before we even knew how exactly we were going to get there, it gave the engineers plenty of time,” Frank said. “We have over 10,000, nearly 11,000, tech associates — and 85% of that is engineers.”  

One overlooked aspect of the pivot to the cloud is what companies do afterward with the data centers they own. Capital One, for example, now has mountains of legacy hardware that must be sold or discarded before it unloads the facilities themselves.  

“We have hundreds of tons of copper and steel that have been recycled from the data centers,” Frank said. 

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