Capital One Makes Progress on Merger Requirements with Underserved Community Investments

Capital One is not dawdling in keeping its promises. Just weeks following regulatory approval of its merger with Discover Financial Services, the bank is already demonstrating it will keep its word.

Two efforts, one in the Bronx and the other in New Orleans, will extend financial access and small business growth in underserved communities.

To secure buy-in to the $35 billion Discover purchase, Capital One needed to make an impact. It pledged to an unprecedented, five-year, $265 billion Community Benefits Program, negotiated with national and local activist groups.

The program addresses just about everything: expanding credit access to low and moderate-wage earners, subsidizing affordable housing, promoting small business lending, and improving relationships with local financial institutions. Essentially, it was a how-to guide to winning skeptical hearts and minds — and it succeeded.

Let’s start in New York. The Bronx will receive $1 million in investments from Capital One, which will be divided among four groups that specialize in small businesses and financial services. They include:

• Ariva: $200,000 to grow its tax preparation, financial advising, and small business services
  
• Bronx Economic Development Corporation (BXEDC): $400,000 to fund the Small Business Loan Program

• Fordham Road Business Improvement District (BID): $200,000 to provide overall operating funds and business guidance
  
• Lehman College Bronx Business Tech Incubator: $200,000 to assist local entrepreneurs and freelancers

This was followed by the grand opening of a Capital One Café at Fordham Road. The Cafès are more than bank branches — they’re also hangouts, financial resource centers, and community centers. Anyone who’s curious about money is invited to stop by for beverages, whether they bank at Capital One or not.

The investment was embraced by Bronx leaders. “This investment represents the kind of responsible, community-centered development we need to uplift our neighborhoods,” said New York City Council Member Pierina Sanchez.

Capital One also said that New Orleans would receive $1 million of immediate community aid for the city’s most vulnerable populations.

A previous press release valued the investment at $500,000, but the bank later stated it would double that amount to $1 million. The investment will be focused on leveling the playing field for low-income communities.

In New Orleans, where home prices continue to rise and wage growth is anemic, that kind of support can’t arrive soon enough.

Let’s be candid here: $2 million is pocket change when compared with Capital One’s pledged contribution of $265 billion. Symbolic or otherwise, though, these initial moves count.

“We are taking a meaningful step to partner with 4 innovative organizations who are investing in the Bronx’s small business ecosystem,” said Kerone Vatel, Capital One’s Senior Vice President, Community Finance, Impact & Investment.  

More investment is to follow, but this initial batch indicates that the Community Benefits Program isn’t an empty press statement — it’s beginning to pay off. And the hope is that, eventually, this report will keep Americans employed.

The bank has five years to deliver. But to arrive early with real money and tangible financial backing goes a long way toward establishing trust.

Capital One bought Discover with strings attached. Regulators — and activist community groups — made Capital One pay a price for the acquisition, namely, hard commitments to individuals and communities that big banks had left behind too many times. 

So far, Capital One is keeping its end of the agreement. But that’s only the start. Success will rely on follow-through. However, judging by these preliminary tries in the Bronx and in New Orleans, Capital One seems to be genuinely committed to remaking how banks do business with underserved individuals.