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February 11 2020

A Starbucks bank? Korean banks are concerned

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A growing number of Korean banking groups are being concerned with Starbucks, mainly because of the U.S. coffeehouse’s potential move into the competitive financial services industry chain. Starbucks, a potential rival that could threaten their survival in the financial market, The Korea Times reports.

According to the Wall Street Journal, “The coffee shop chain’s U.S. headquarters had $1.2 billion that customers had loaded onto Starbucks gift cards and the mobile app as of the first quarter of 2016”. The global chain itself has not announced its plans to edge into financial services.

South Korea’s Hana Financial Group is acutely aware of Starbucks’ competitive potential.

Kim Jung-tai

Starbucks revealed that its rewards program in the US had grown to 18.9 million active members at the end of 2019, up 16% year-over-year. “This is important because we know from experience that when customers join our rewards program, their total spend with Starbucks increases meaningfully.”

Starbucks, however, has not been subject to regulations here as it has not offered interest for the prepaid cash and the money loaded onto its gift cards and app can be used at its stores only.

Hana Financial Group Chairman Kim Jung-tai expressed his concerns over this situation: “Technologies have allowed coffee companies like Starbucks to be our rivals,” he said in his New Year’s address. “It will be fine to call Starbucks an unregulated bank, not a mere coffee company.”

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