Digital Wallets Are 'More Threat Than Opportunity,' Fairbank Says

Silicon Valley is storming the gate and Capital One's Richard Fairbank is getting nervous.

"I think so many of the people who work for Google or Facebook or Apple or others -- when they think about 'how can we change the world,' almost the first place they look is at traditional banking," Fairbank, the chairman and chief executive at McLean, Va.-based Capital One (COF), said at an investor conference in New York Tuesday. "I think they lick their chops saying, 'Man, that thing is old school.'"

While defending the bank's history as an innovator, Fairbank described his unease with companies like Google and PayPal that are developing products like digital wallets that could take the place of traditional credit and debit cards and could put financial institutions "in a back seat." That's particularly the case as companies innovate "right at the edges" of the industry and thus aren't subject to the same regulations and requirements as banks, Fairbank said at the conference hosted by Barclays.

"You have changes in payments [and] you have the exploding world of couponing, real-time couponing that can kind of change how retailing works. But I think the most important one as it relates to us is digital wallets," he said.

Such efforts are "more of a threat … than an opportunity," Fairbank added, while also noting that the bank is, at the same time, working with some of those very same companies to innovate in the digital and mobile banking spheres.

During his presentation, Fairbank also emphasized that the bank has no immediate plans to continue making acquisitions and is instead focused on integrating its recent purchases of ING Direct and HSBC's credit card portfolio. Over the last six years, the company has more than quadrupled its assets, to $332 billion, largely through acquisitions and now ranks among the country's 15-largest bank holding companies.

"While we have done a lot of acquisitions in the last number of years, I very much feel that we've arrived at a destination we've spent many, many years working for," he said.

"In terms of our balance sheet, at this point it's about execution, really executing on these big two complex transactions and really generating the earnings power that I think many investors have seen as a long-run opportunity out there for Capital One," Fairbank added.