By Danielle Douglas
Monday, August 30, 2010; 10
More than a year after completing the acquisition of Chevy Chase Bank, Capital One is rolling out a rebranding campaign this week in advance of plans to formally change the institution's name to its own nameplate on Sept. 10.
Prepare to be bombarded by advertisements on television, billboards, buses and in newspapers.
The rebranding effort marks Capital One's third such campaign in five years. The McLean-based credit card giant went into banking in 2005 with the $5.35 billion purchase of Hibernia, a New Orleans-based bank with 293 locations in Louisiana, Mississippi and Texas. A year later, Capital One tucked New York's North Fork Bancorp into its portfolio, a $14.6 billion acquisition that gave the company 353 branches in New York, New Jersey and Connecticut.
Bill McDonald, chief marketing officer at Capital One, said the company has dedicated the most time and money in its latest campaign -- he declined to offer exact figures -- because Chevy Chase Bank is in its back yard.
"This is easily our biggest and most impactful marketing plan ever," he said.
Instead of the one or two commercials in rotation that heralded the prior conversions, the Washington area will be treated to rotations of four broadcast ads over the next few months. The first will debut this week. Some will feature Washington Redskins quarterback Donovan McNabb, others Capital One's "Viking crew" explaining the conversion, services and community involvement.
Metro stations around the region will showcase Capital One banners with the company's mantra, "What's in Your Wallet?" prominently featured. Area residents visiting their favorite online news sites or chatrooms should also expect to see pop-up and banner advertising.
Nearly 10 creative agencies were employed by Capital One for everything from direct mailing efforts to point-of-sale materials. The team initially focused on educating Chevy Chase customers of the coming conversion via the bank's Web site, e-mails and regular mail. Setting customers at ease in the weeks following the merger, McDonald said, is crucial to keeping them from leaving the bank.
By now, Chevy Chase customers should have their fill of information. But that doesn't guarantee that they paid much attention. "I've seen the stuff on the Web site and received a letter, but honestly I don't remember reading it," admitted Rasika Krishna, 30, who has been a Chevy Chase customer for nine years. "There are no concerns, as long as the number of branches and the online banking remains the same."
Some fees will change with the conversion. For instance, customers with personal savings accounts can expect to be hit with a $3 teller withdrawal charge for more than one face-to-face visit per month or a $3 charge for more than three ATM withdrawals a month. On the flip side, minimum balance service charges will decrease by $2 and accounts for minors will now earn interest on all balances.
Mike Dobbins, executive vice president of consumer banking, described the changes as minimal. If anything, he said, the merger will offer Chevy Chase customers a suite of new products, such as mobile banking and rewards checking, which allows customers to earn points for spending that can be redeemed for merchandise, airline tickets or cash back.
Still, all of the upheaval in the banking industry in recent years has made consumers skittish, said Vanessa Gail Perry, associate professor of marketing at George Washington University's School of Business. "It's a tough time for banks to make these kinds of changes, but consumers are very reluctant to switch financial providers," she said, referencing a 2009 study conducted by Interbrand Research.
Chevy Chase's bread and butter was consumer offerings. That has begun to change under Capital One. Dobbins said some branches will have now have small-business specialists on hand. "There is a whole series of options that comes with scale," Dobbins said.
That scale will not only offer Chevy Chase customers more services, but also broader geographic coverage. Joel Cohen, 22, who opened his Chevy Chase account as a freshman at the University of Maryland, welcomes the added convenience of banking outside of the Washington area. Yet he is leery of being with a "large corporate entity, where customer service may not be the same."
Capital One is bulking up on staff, with 300 job openings in the Washington area for branch managers, business bankers, tellers, loan syndicators and more. Personnel changes will be most noticeable in the call center division, where the company is also slated to add dozens of employees: After the merger, Capital One decided to extend the hours of operation at its call centers for round-the-clock service.
The company also added a few electronic checking products and the ability to instantly open accounts online several weeks ago.
Capital One's $520 million acquisition of Chevy Chase falls in line with the company's strategy of pursuing regional banks with solid deposits to offset a heavy reliance on the credit markets. Analysts say having access to those deposits also provides a fairly inexpensive source of funding for the company's credit card operations. With Chevy Chase's $13.8 billion contribution, Capital One now has $117.3 billion in deposits, making it the ninth-largest bank in the country based on deposits. The company said that after the merger, its share of local deposits in the region now hovers around 10.9 percent -- the fifth-highest share in the metropolitan area.
Observers can't help but wonder what the company's next move will be. "There is a growing sense that we are going to see more consolidation within the banking industry. And [Capital One has] finished digesting Chevy Chase from an operational standpoint, so what's next?" said banking analyst Bert Ely, who is also on the advisory board of Burke & Herbert Bank in Alexandria.
Dobbins said Capital One is more than satisfied with its current coverage, but the company "will always look at pockets where we see customer demand as a course of business."