US credit card giant Capital One cuts more than 1,100 tech jobs

The layoffs were the result of Capital One Financial spending years investing in systems to improve its efficiency. PHOTO: BLOOMBERG

NEW YORK – Capital One Financial eliminated hundreds of technology positions this week, the result of the credit card giant spending years investing in systems meant to improve its efficiency.

More than 1,100 workers were affected, according to a source familiar with the matter. Those employees have been invited to apply for other roles in the bank, with hundreds of open positions across the company, Capital One said in an e-mailed statement on Thursday.

For years, Capital One has been investing in cloud technology that it has long said will allow it to both enhance products and improve its so-called efficiency ratio, a key measure of profitability that shows how much it costs to produce a dollar of revenue.

With this week’s move, the company is eliminating positions focused on the so-called agile delivery of technology. Instead, engineers and product managers will be expected to use agile routines naturally.

“The agile role in our tech organisation was critical to our earlier transformation phases, but as our organisation matured, the natural next step is to integrate agile delivery processes directly into our core engineering practices,” Capital One said.

Capital One chief executive Richard Fairbank touted the company’s technology investments at an investor conference in December, saying they allow it to move more quickly and tailor its response to a changing economic environment.

Still, he warned, there are opportunities for the bank to remove legacy technology costs.

“We have invested very heavily in technology and we continue to do so,” Mr Fairbank said. “At the same time, along the way, the ability to generate efficiencies with respect to tech cost itself – what we call tech-on-tech efficiency benefits – is really significant.”

Employees affected by the cuts who do not find another job within Capital One will be eligible for a severance package that includes at least 16 weeks of compensation, the company said.

BLOOMBERG

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