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The Next Big Thing You Missed: How Starbucks Could Replace Your Bank (via Wired Business) *Must Read

Great piece; good fit with some of my current work in the banking sector.

The Next Big Thing You Missed: How Starbucks Could Replace Your Bank | Wired Business |

You probably haven’t seen a bank teller since the Bush administration, but you’re on a first-name basis with the barista at your neighborhood Starbucks. As the coffee giant’s soaring revenues attest, daily trips to the coffee shop have replaced regular visits to the local bank branch as an American ritual. In the days before wide access to digital technology, the idea that banks would provide most of the services for moving your money around made sense, since they were the closest to it. But now, access to money is nearly instantaneous, no matter who is ultimately holding it. Banks will never go away entirely. Someone has to keep your money secure. But as long as that’s taken care of, others can now work their way into the game, offering all sorts of other services that are faster, cheaper, more convenient, and more intuitive than those of banks. In the end, the best app wins, no matter who makes it. As Busch and Moreno put it: “The risk for banks is that new competitors will consign them to a limited role as back-office utilities, while non-banks become the new face of their customers’ financial lives…The cards represent two traditional banking functions now being handled by Starbucks — payments and storing money. If you buy a friend a Starbucks card with your own Starbucks card, you’ve added a third function: money transfers. In a sense, you’ve taken money you’ve saved with Starbucks and used it to pay someone else while Starbucks brokers the transaction… As one of the world’s most admired brands, it’s not hard to imagine Starbucks capitalizing on that cachet to offer an expanded range of financial services centered on its cards. Even for customers who still like to go into bank branches because they trust face-to-face interactions, Starbucks has more than 11,000 stores in the U.S. alone. Baristas become the new bank tellers...González says banks can take a lesson from the way Amazon’s embraces third-party sellers, who piggyback on Amazon warehouses and web infrastructure in exchange for a cut of their sales. He says banks can take a similar approach by seeing themselves as platforms on which lots of small companies can build products and services. In this model, banks could still profit handsomely even if they mainly took on a backend role





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