Capital One Financial Company1. How is Capital One's use of IT different from other mass customization strategies? Capital One uses IT through its Information-Based Strategy (IBS) to “record, organize and analyze data on the characteristics and behaviors of its customers,” as the CEO said. Richard Fairbank. Their philosophy was to leverage information by building scientific models that could be used both to assess the creditworthiness of potential cardholders through FICO scoring and to personalize product offerings for existing cardholders. This was done through data mining, sorting, personalizing marketing offers and campaigns, and then analyzing that data to see which campaigns worked – why and what they generated in terms of revenue and profit generation. This differs from other financial institutions in that these other institutions compiled data manually, accepted applicants based on debt-to-income ratios, and all charged the same interest rate and annual fees. Capital One viewed direct marketing as a way to record every interaction with a customer electronically. This allowed them to personalize products to each customer and ensure that every interaction was unique. Direct marketing gave Capital One the ability to transform a business into a science laboratory where every decision regarding product design, marketing, communication channels, credit lines, customer selection, collection policies and Cross-selling decisions could be systematically tested using thousands of tests. experiences. It also made it possible to roll out products nationally and at full speed once they were proven effective, without incurring the significant fixed costs that come with physical operations. This gave them the opportunity to reinvent the entire economics of a business. Capital One realized that few products were being marketed directly and even fewer companies were fully leveraging the power of statistical analysis. In 1994, Jim Donehey was hired to update Capital One's computer system. His solution was to replace their aging mainframe computers with an object-based system, but this technology had never been used on such a large scale. In contrast, two-thirds of Capital One's competitors have outsourced their IT functions. Within five years, the company had the world's largest Oracle database, with 23 terabytes of data, earning the Gartner Technology Excellence Award.2. How sustainable is Capital One's advantage?