TAB Bank in Ogden, Utah, is seeing early success from its bet that younger, tech-savvy consumers would rather get an ownership stake (albeit a small one) in companies like Walmart and Amazon instead of points they can use to spend at those brands.
To further this strategy, the bank launched a debit card in August that pays rewards in fractional shares of stock for major brands. Its goal is to launch the product nationwide, but only after it has proved the demand for it in its home markets of Ogden and Salt Lake City.
Between February, when
Customers who've opened TAB Flow accounts have proven to be exceptionally engaged, according to Nick Craven, senior vice president of consumer and commercial banking at the $1.2 billion-asset TAB.
"We're tracking metrics that show new customers are touching our product four or more times a week, which is just incredible," Craven said. "We're super-optimistic about the data we're gathering and the traction we're getting. … The rewards are fractional, but people are watching them build."
The account is split into two tiers. TAB Flow, the basic level, pays 0.5% rewards when customers shop at six blue-chip brands, Walmart, Amazon, McDonald's, Disney and Starbucks. Consumers are rewarded with fractional shares of whichever company where they shopped.
TAB Flow+ charges a $5 monthly fee, but it doubles the per-transaction reward to 1% and offers a wider list of 20 brands eligible for automatic rewards. Tab Flow+ customers also earn the 1% reward for any other spending they do. They can choose up to four companies from an even-wider list of 200 stocks for the allocation of the rewards from that additional spending.
Bumped, the Portland, Oregon-based fintech that is handling stock trades and fractionalizing shares for TAB, reported similarly high levels of engagement from a pilot it conducted prior to TAB Flow's launch. Pilot participants averaged a 19% increase in debit card spending and a 14% increase in transactions after they began receiving fractional-share rewards, according to Amy Dunn, Bumped's chief marketing officer.
Since banks receive a portion of the swipe fees consumers pay when they use payment cards, those numbers convinced Bumped, which had been positioning its service as a tool big publicly traded retailers could leverage to boost brand loyalty, "that there was a bank play here, as well," Dunn said.
TAB is the first bank to introduce a stock rewards card through Bumped, but the relationship is not exclusive. "We think of Bumped as a platform any brand or financial institution can build stock rewards on top of," Dunn said.
Kristopher Lazzaretti, head of data-driven marketing at Deluxe, called rewards programs featuring a defined product such as
Customers who prefer travel rewards are often affluent or mass-affluent — desirable customers for banks — but not the target market for TAB Flow.
TAB found that while TAB Flow clients "skewed younger," being millennials or Generation Z, they also "tended to skew toward those who … wanted to find a way to join into the ownership economy," said John Huntinghouse, vice president of marketing for TAB Bank.
Lazaretti added: "One of the key and critical levers in marketing is understanding how much a household is able to actually fund in core deposits, which often has little to do with income. It has much more to do with attitudes and behaviors."
TAB was founded in 1998 as Transportation Alliance Bank, and its original target market was long-haul truck drivers. Over time it has added traditional commercial lending verticals, including asset-based lending, equipment financing, factoring and commercial real estate.
In recent years, TAB has begun establishing partnerships with fintechs to further its management's goal of serving underbanked groups, though some ventures have resulted in criticism.
A partnership with EasyPay, a company offering financing options mainly for automotive repair shops and furniture retailers, has opened TAB to complaints from consumer advocates, who've claimed the interest EasyPay charged was excessive, climbing sometimes into the three digits annually. The EasyPay partnership also ensnared TAB in a
With TAB Flow, the company appears to be in much safer territory.
"Our mission is to create access to financial services," Huntinghouse said. "This is a great product to do that."
