Discover Merger Boosts Capital One’s Competitiveness

Key Takeaways:

• Catchy slogans, like “What’s in your wallet?”, incentives such as cash-back on all purchases and a bevy of celebrity cameos have likely provided Capital One and Discover with brand recognition. However, this outsized advertising spend (42% and 21% of the cohort’s total ad spend and each rising 50% YoY in 1Q24) has been less effective in driving mobile app usage and loyalty relative to its peer group

  • Though Capital One and Discover’s apps fare well in terms of new installs, much is due to paid marketing. In 2023, Capital One had the lowest penetration of organic downloads out of the cohort at just 62%, vs the cohort average of 73%

• Discover and Capital One have struggled with consumer loyalty, with their respective mobile apps churning 13-14% of users every month, about 200bps - 300bps more than the apps of JPMChase, Bank of America and Wells Fargo

• Spikes in usage are typically driven by promotions, which prompts previous customers to return for the deal, before churning off again. The number of these resurrected users rose 16% YoY at Discover in 1Q24, while the number of churned users increased 21% YoY; Capital One’s churned users rose 7% YoY

• Though website engagement for Capital One and Discover have experienced similar challenges historically, Sensor Tower data is showing recent improvement: QTD 2Q24 average session count fell <1% QoQ at Capital One, while Discover’s session count actually rose <1% QoQ. In previous quarters, QoQ declines were much greater; Capital One and Discover’s QoQ growth was as low as -2% QoQ and -3% QoQ, respectively

For more information, request the full report from reports@sensortower.com.