Texas digital-only bank offers miles instead of interest

via Bank Innovation

As digital banks strive to lock in customers, a Texas-based newcomer to the industry is betting on travel miles as an incentive.

Bask Bank, a fee-free digital savings bank created and funded by Texas Capital Bank, launched earlier this week with “thousands of customers.” Instead of interest, customers accumulate American Airlines AAdvantage miles for every dollar deposited into their accounts.

“This new digital bank is the next step in Texas Capital Bank’s ongoing strategy to meet customer needs,” said bank President and CEO Keith Cargill in a statement. “The digital nature of Bask Bank will bridge the gap between physical and virtual banking to deliver a premier user experience beyond mere transactions by giving savers memorable and tangible benefits for their deposits.” 

The bank explained that travel miles are part of a bigger approach geared at goals-based saving. Bask Bank President Matt Quale said surveys suggested customers were interested in long-term savings goals but didn’t feel this was possible.

“There’s a lot of tension between saving for tomorrow, [and] people have a hard time putting their money aside because they feel like they’re sacrificing something,” Quale said. “But creating a savings program that rewards [customers] with something that most people really want, like travel, is a very powerful value proposition.”

Bask Bank is hardly the only digital-only bank looking to lifestyle rewards as customer-acquisition drivers. For example, last month, N26 partnered with scooter-rental company Lime and online travel platform Booking.com to offer added rewards to customers who transact using N26 debit cards.

Quale noted that frequent flyer miles are valuable for Bask Bank customers, who see the account as a means to reach aspirational lifestyle goals. As a digital-first bank, potential customers can sign up online and manage their accounts through a mobile app. Quale confirmed that Bask Bank works with data aggregator Plaid to connect accounts from other  institutions.

Development for Bask Bank began in mid-2019 and relied heavily on customer feedback, according to Quale. The bank offers customers the chance to earn 5,000 American Airlines miles by keeping $1,000 in the account for 30 days. Customers offering feedback can earn additional miles.

Quale would not comment on how much money the bank currently holds in its deposit accounts, but said he believes Bask Bank has the potential to accumulate billions in deposits in the coming years if it continues to evolve its product offerings based on customer feedback. As for future product releases, he said checking accounts are a possibility.

“The thing we want to think about going forward is, ‘how can we help people across a variety of different things like saving for a wedding or the mortgage,’” he said. “That’s going to encourage people to do more and actually get more out [the products].”

Texas Capital Bank, Bask Bank’s parent institution, had $33.5 billion in assets as of September 2019.