Rich Fairbank was a young Stanford MBA working for Strategic Planning Associates when he had an epiphany: “After working with companies in many different industries, I realized that when the world is about to change, the last people to see it are those closest to it.”
Fairbank saw that banks were issuing one-size-fits-all credit cards with fixed annual rates, ignoring people’s different lifestyles, needs, and creditworthiness. A lot of information on potential credit-card customers was available. Why not use it to create customized solutions for each person?
Fairbank’s first challenge was selling the banking industry on his idea—asking bankers to undergo something akin to a religious conversion, he says. In 1988, Signet Bank in Richmond agreed to try Fairbank’s idea. Three years later, Signet offered the first cards targeted to the millions who couldn’t get plastic before but were good credit risks. By 1994, the credit-card operation was the tail wagging the dog. Signet spun it off, and Rich Fairbank became chair and CEO of the new Capital One.
The company grew rapidly. By the end of 2000, Capital One had 34 million customers and more than $29 billion in cardholder balances.
Fairbank defied conventional wisdom again with the acquisition of Hibernia Corporation, a New Orleans–based holding company, in 2005 and North Fork Bancorp, in Melville, New York, a year later. He predicted that the capital markets were about to undergo major changes and “good old-fashioned bricks-and-mortar banking” was going to prevail.
Capital One is now the nation’s 13th-largest bank, with 740 locations and more than 50 million accounts worldwide. Fairbank was named 2006 Banker of the Year by American Banker and best CEO in specialty finance by Institutional Investor.
His newest project: teaching kids about money. In 2006, Capital One and Junior Achievement launched a “finance park” in Fairfax County, an interactive mobile classroom to introduce middle-schoolers to money management. Some 14,000 kids will go through the program in 2008; Fairfax County is creating a permanent facility to house it.
Before he went to business school, Fairbank, the father of eight, thought he’d end up running a program for kids. The finance park has enabled him to come full circle. “We have a unique opportunity to add value to the community,” he says. “How cool is that?”