Yesterday a significant story came across the news headlines but its importance appears to be overlooked.
The Korean Times posted a story discussing how banks in Korea are sounding the alarm about Starbucks and the amount of money that its faithful followers load onto their prepaid cards and mobile app each quarter.
In just one quarter of 2016 alone Starbucks customers had loaded more than $1.2 billion onto Starbucks prepaid cards and transforming into SBUX, which can only be spent at Starbucks. In essence, they are given a $1.2 billion loan with no interest obligations to speak of.
As the Korean Times article pointed out, this figure is larger than the total amount some major American provincial banks have in their deposits. All this without needing to deal with financial regulations or offer further incentives to “depositors.”
This has effectively morphed Starbucks from a coffee company into an unregulated bank capable of rivaling some of the biggest players out there.
And now there are rumors that Starbucks is looking to blockchain technology to manage its SBUX system and streamline it worldwide. But this network won’t just be for the purchasing of coffee.
One bank chairman indicates that Starbucks already appears to be well ahead of its new rivals. “The most-used mobile payment app in the U.S. was the Starbucks app, not Google or Apple Pay. About 40 percent of its payments were made with the app, and the amount of cash loaded onto its prepaid cards and apps surpassed the amount of cash that some provincial banks had.”
The first hints of their plans appeared in July of 2018 when Starbucks revealed that it was investing in the Bakkt cryptocurrency exchange. Fast forward to today and they now appear to be establishing themselves in the asset management business and expanding their presence into the currency, loan, and insurance markets.
What was once just a coffee company is budding into a full-fledged fintech firm, and the old banking order should be on notice.
What started with Facebook announcing its Libra Association to the world and drawing the ire from regulators around the globe has morphed into large companies like Starbucks and WisdomTree picking up the torch.
We are possibly witnessing the privatization of money and a changing of the financial guard. Starbucks just put the world on notice and global finance will never be the same.
