Finclusion
  • News
  • Explained
  • Fact Check
  • Inclusion
  • Blog
No Result
View All Result
Paytm
  • News
  • Explained
  • Fact Check
  • Inclusion
  • Blog
No Result
View All Result
Finclusion
No Result
View All Result
starbucks

Starbucks — A Bank in Disguise

October 23, 2022
in Enterprise
402 22
0
Share on FacebookShare on Twitter

It goes without saying, Starbucks is undoubtedly the most popular coffee chain across the globe. But apart from their aromatic coffees with diverse flavors, what else is the coffeemaker’s forte? While many would have their cheese toasties in mind, Starbucks’ knack lies in something entirely else. 

A Coffee Maker or a Fintech Firm

There is a genius secret to Starbucks’ success in those lucrative loyalty cards that many of us wish to buy. The undercover strategy of these cards enables Starbucks to borrow money from their customers interest-free. Buyers can deposit the balance in their cards, which they can use to purchase coffee in the future. In April 2022, the card generated 24m+ members and $1.6B in “deposits”, making it the world’s largest Neo-bank. Since 2016, the balance on the card value has always exceeded $1 billion at the end of every financial year. Hence, the loyalty cards act like a golden goose for the coffee chain, making it the owner of billion-dollar assets surpassing most US banks.

You might also like

MRF Shares Hit 1 Lakh Mark

MRF Shares Hit 1 Lakh Mark

August 28, 2023
Reliance Demerger Explained

Reliance Demerger Explained

August 28, 2023

Why do customers go for it

While Starbucks’ business model includes deposits and financial activities, it cannot be conventionalized as a bank. It does not provide interest, does not let the customers redeem the balance for cash, and does not insure the deposits either. So why do people still buy the card? Here’s where the incentives jump in. Starbucks’ loyalty program is generously rewarding to the buyers. From free birthday drinks to customized beverages to upgrades and coupons, they left no stone unturned to influence the consumers’ minds. 

Are there other variants of the Starbucks business strategy

Starbucks isn’t the only entity that has turned the deposits into a million dollar opportunity. Many other businesses might be camouflaging the same strategy to flourish with their clever trade tricks. One popular example is landlords making money from security deposits. These deposits are invested in high-yield savings accounts that generate 4-5% annual interest. Another similar practice might be carried out by universities collecting refundable security deposits. While they are intended to be returned to the students during graduation, universities manage to earn handsome gains in the interim period. To conclude, earning opportunities are infinite, and it doesn’t take a virtuoso to figure it out. After all, the genius lies in observation. 

Related Stories

MRF Shares Hit 1 Lakh Mark

MRF Shares Hit 1 Lakh Mark

by Finclusion
August 28, 2023
0

For those unaware, the past few weeks have been quite eventful for the share market. Reliance Demerger, Nifty and Sensex...

Reliance Demerger Explained

Reliance Demerger Explained

by Finclusion
August 28, 2023
0

Nearly 10 months back, the largest conglomerate in the country announced that it would demerge its financial services business into...

HDFC Merger Explained

HDFC Merger Explained

by Finclusion
August 28, 2023
0

Did you hear about what happened on July 1, 2023? HDFC Limited and HDFC Bank merged, and it was a...

A Guide to Measuring Business Performance

A Guide to Measuring Business Performance: Understanding Financial Ratios, and KPIs

by Finclusion
July 7, 2023
0

Are you afraid by the complex jargon of the financial world? Do you find yourself lost in conversations where others...

Next Post
health insurance

Health Insurance — Why is there a Drift Towards Digitization and Innovation

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Finclusion

Quick Links

  • About Us

Follow Us

No Result
View All Result
  • News
  • Explained
  • Fact Check
  • Inclusion
  • Blog

Welcome Back!

Login to your account below

Forgotten Password?

Retrieve your password

Please enter your username or email address to reset your password.

Log In
Are you sure want to unlock this post?
Unlock left : 0
Are you sure want to cancel subscription?
Go to mobile version