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Bask Bank is the new bank offering a no fee savings account that earns American Airlines AAdvantage® miles instead of interest. There are a bunch of bonus offers you can earn from 1000 miles for signing up and providing quick feedback, to 5000 miles for holding a $1000 balance in your account for a month, to larger offers for keeping miles in your account for a year. That’s on top of earning miles month after month for your savings balance.
In an earlier post I walked through how your earning through a Bask Savings Account makes a lot of sense – not just against the average return of a savings account in the U.S., but even against the high yield offers that are out there.
I was able to get some time on the books to speak with Matt Quale who is the President of Bask Bank to get the backstory on this new mileage-earning savings account and also put some questions to him about how he feels about people registering for a free account just to earn the miles – and how he plans to convert those customers into long-term savers.
He understands that with the generous up front bonuses Bask Bank is offering, a lot of customers are going to sign up and earn the bonus and it’s on him to earn out continued business – by offering a good customer experience and a rewarding value proposition that keeps innovating. I liked hearing that.
And I liked hearing that he sees the accounts being used tactically – put money in to earn the miles you need and build up your balance, take the money out when you’ve met your goals and it’s time to spend it. Savings accounts, and earning miles, are just one part of an overall portfolio that lets us accomplish the travel we’re after.
What I learned at the outset is that he’s one of us. When we spoke he was just from a peak season ski trip where he’d redeemed points for his hotel. He’s an American Airlines Platinum member and a Marriott Platinum rounding towards lifetime status (he’s over 7 years of Platinum and 500 cumulative nights with the program). So he gets what we’re after.
The interview is lightly edited for clarity and because of my own challenges with transcription.
Matt, tell me a little bit about your backstory and the start of the bank, where were you before, when did you get involved and what motivated you?
- I’ve spent the last decade in financial services between American Express and Met Life, where I was part of the individual life and annuity unit, spun off as Brighthouse Financial [GL: he’s too humble, he was Brighthouse’s Chief Marketing Officer].
Throughout my career I’ve been able to really hear from consumers and I learned how hard it is for people to talk about money. Everyone feels like they haven’t saved enough or done enough to prepare for the future. So when Texas Capital Bank called about a new digital savings account, I was intrigued. I met Keith Cargill, Texas Capital Bank’s CEO, and he talked about the importance of aavings – the financial security and freedom that comes along with it. However, despite their importance, savings accounts haven’t kept up with the broader financial landscape and they don’t feel very rewarding.
After talking with Keith, we saw an opportunity to encourage people to save by rewarding them with something really valuable to a lot of people – airline miles. People often look back on life and wish they’d traveled more. Now they can save for a financially secure future while also enjoying today with some bucket list trips.
You mentioned sitting down with the CEO of Texas Capital Bank, N.A., how does Bask Bank relate to BankDirect and Texas Capital Bank?
- We’re a business unit of Texas Capital Bank. BankDirect is part of the same business unit [that I run].
Why market a separate bank and not another product under the BankDirect umbrella?
- Texas Capital Bank is a commercial bank. Launching a new consumer brand should have a different name and brand identity. We looked at extending BankDirect, but that was started 20 years ago, and we had a real opportunity to do something that better identifies what the experience would be.
As we started coming up with the name we didn’t want people just to think this was a digital bank. I think everybody assumes a bank will have the digital properties at this point. We wanted people to have a connection. [With Bask Bank] we’re taking little moments, sunshine, and energy [that you can bask in]. The use of orange in our logo is playing off of sunlight and energy.
Bask Bank looks to me to be a whole new technology stack. Why did you go with a fresh build and what was the design philosophy?
- We did go with a fresh build, as we took a look at it in the banking space, there have been huge strides in terms of digital banking. So there was an opportunity to leverage new technology out there as we built the customer experience.
The hardest most challenging thing is the onboarding experience. We wanted to make sure that people have a good onboarding experience. That’s been one of the most challenging things. There’s a lot of regulatory and security requirements that you want to put in place.
We need information about the customer but also…to let people easily fund their account and that’s a big advantage.
It was also really important to reduce fees. What’s nice about making this digital is we’ve been able to remove any kind of account fees or other fees.
There is still a call center, it’s Dallas-based, but..being digital-centric really meant we were able to lower our cost structure which drives the ability to raise the return to the customer because we’re not paying for branches.
Why do so many banks get away with offering low interest rates, when you offer a better rate of return?
- In a lot of ways the innovation in financial services has been in other categories. The savings category is ripe for revolution.
Who do you see as the customer for Bask Bank?
- We call them life maximizers. I think these are people who are financially savvy and interested in savings and really are into the points and mileage game. We’re always talking about a way to maximize the return. Part of what these folks like is the optionality that miles give them. Sometimes you’re better off spending cash versus miles, but they understand the real value they can get. They’re very savvy as they play mileage game.
You’ve got some incredible bonuses. Some people are going to open accounts, earn the generous bonuses you’re running now. They won’t all convert to long term savers with you. What would you say to those folks?
- As they experience the product and they experience the ability to earn miles I think a lot of them are going to stay because it is a different kind of thing than they’re getting currently. They will see the value of miles in their portfolio. There’s a lot of value in the optionality, and the more miles you have the bigger and better kind of experiences you can go get. They’ll like seeing mileage balances grow on a monthly basis.
Since you’re an American Airlines Platinum and Bask Bank is making it possible to earn their miles, what’s the best trip you’ve redeemed for?
- Sometimes the best trips are when you take your whole family. The best trip was when I took 5 of us to San Diego for Christmas to see my mom and my dad.
Did you have to pay higher AAnytime award prices?
- No, it was one of those things, I was able to leverage the miles pretty effectively.
Let’s talk about going forward. What does success look like in the first year?
- I think we hope it gets really big. I hope we bring a lot of customers on. The real definition of success is customer feedback and experience. If customers come back and say the product is easy to sign up for, easy to use and keep track of, and “I feel like I’m getting real value out of this” that’s success. We’ll attract customers if people like the product and have a good experience with it.
As you work to grow beyond the initial launch will we see more offers?
- I think we’re going to keep thinking about new offers and new experiences. We’re not done so we’re going to keep innovating. A lot of the innovation is going to come from customer feedback. We started with the 20,000 mile bonus that we’re offering but we got a lot of feedback that customers wanted 10,000 and 40,000 mile bonus opportunities too. That’s why we’re launching a tiered bonus approach.
Is there anything besides the miles that we should be focusing on here?
- The ease of managing this account. When a lot of people think about banking or opening another banking relationship, the first they go is “what a pain, I don’t want to go through an application process or manage another statement,” but we’ve created a 5 minute process that’s very low maintenance. For a lot of people opening a no-fee Bask Bank account is easy to do, and they’ll use it tactically as they look to achieve their goals.
Tactically? You’re comfortable with customers doing more than just adding funds to an account?
- One of the things we really want to help people think about is where they want to go, what they want to do with these miles, whether it’s travel with 5 people across the country or go to Paris. They need to have goals. That makes it easier to set aside money over time. People will put aside money for a specific trip and destination. People will take money out of their account to spend when they’re on the ground since their airline trip is paid by miles.
Most businesses just see the relationship as one way, they want customers adding to the account. You’re comfortable with customers moving money in and out, that their balances will fluctuate over time?
- It’s peoples’ money, people need to think about their money as a portfolio, with a whole bunch of things they need to go do – retirement savings, brokerage account, checking – they should think of savings as part of that portfolio. People should be able to put in or take out when they want to depending on their goals.
That’s part of the reason we have no minimums, we want people to be able to move money in and out.
Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the views and opinions of Bask Bank, Member FDIC.