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by Alex Palmer | June 28, 2016
While a $5 Starbucks gift card may be a popular on-the-spot reward for employee or customer incentive programs, all those cups of coffee can really add up. A new report from the Wall Street Journal looking at data from Standard & Poor's finds that the money deposited in Starbucks gift cards and accounts to its mobile app exceeds the total deposits at a number of banks.

The analysis found that the coffee giant held more than $1.2 billion for customers in the first quarter of 2016 -- exceeding the money held by institutions such as the California Republic Bank ($1.01 billion), Customers Bancorp ($780 million), and Discover Financial Services ($470 million). The coffee company also had more in deposits than Green Dot Financial Services Corp. One of the largest providers of prepaid cards in the country, Green Dot only reported $56 million in deposits. 

This astonishing growth reflects the potential of gift cards to scale beyond simple one-off rewards, into a trusted, long-term relationship with a brand -- which presents interesting implications for the incentive industry.

While putting money on a Starbucks card does not offer interest as traditional savings accounts do, it does offer convenience, thanks to the company's easy-to-scan mobile app. Using the app also provides frequent added benefits and special offers, from discounted food and drinks, to the ability to see what song is being played at the coffee shop. Customers have responded to these offers: In the second quarter of fiscal 2016, 41 percent of Starbucks transactions were conducted using a card, and 24 percent using the app.

Long a leader in card-based customer loyalty, Starbucks' transition to a smartphone-based app allows customers to load additional cards, ensuring that existing users can consolidate the value of multiple cards into one platform. It also encourages new customers to sign up for the app, turning a single gift card award into a long-term loyalty platform. And by encouraging customers to load money onto the card, it ensures they will go into a Starbucks rather than a competitor if at all possible.