Cutting the traditional branch ties: a private business bank in Rockville, Md., emphasizes technology that eliminates geographic boundaries--and then partners with its customers to provide customized solutions to complex challenges.

• Author: Albro, Walt

WHAT WOULD THE BUSINESS MODEL LOOK LIKE if a bank were no longer tied to a branch network? Some financial institutions around the country are exploring the concept.

An example of a de novo bank that is not dependent on extensive branching is Capital Bank, which has its headquarters in Rockville, Md., a suburb of Washington, D.C.

The bank sees itself primarily as a private business bank for mid-range small businesses. It is oriented toward digital technology, but it doesn't simply provide tech solutions: It emphasizes talking and listening to its customers and providing them with customized answers, especially for unusual or complicated problems.

Although it has three traditional branches in the metropolitan area, the bank does not see its market as limited to one geographic place. "Our focus on digital technology means that we have been able to serve international customers and 'out of footprint' commercial customers," says Ed Barry, CEO. The bank also serves 50,000 secured credit-card retail customers throughout the United States.

One of the bank's key offerings is remote deposit capture (RDC), including both office-bound and mobile versions. RDC is more than just a product. While many banks simply ship the equipment and software to the customer along with a toll-free telephone number to call for help, Capital Bank talks to and directs the customer through the equipment set-up and provides personalized extras, such as helping to integrate the RDC software with existing business software or facilitating the production of unique reports.

"We partner with our customers to deliver customized banking solutions with high-end, personalized service," says Barry. "Our differentiation is in our creative delivery and how we are able to be very entrepreneurial in dealing with complexity."

Uses boards of advisers

The institution was originally founded as a commercial bank in 1999. Three years later, new investors joined the venture, and they brought in a new management team, giving the institution its existing name, Capital Bank, and creating the private business-bank orientation.

One of its approaches was to hire only highly experienced staff who already had established networks of business contacts. This gave Capital Bank a leg up in terms of prospecting for customers. The bank currently has about 130 employees.

One marketing strategy was to appoint three boards of advisers, one each for the major jurisdictions in the Washington metropolitan area...