The word bank teaches the wrong thing (but doesn't have to)
When using the word bank, I find the problem my mind is tackling is not one of translation, but of guessing the anticipated answer.
We are all familiar with the fact that many of the questions flag correct answers as incorrect, which makes this problem not unique to use of the word bank. But that is because the course is young. Over time, one would expect (or at least hope) that all correct answers will accepted.
However, when using the word bank, the offered bits and pieces appear to be selected from only one of those answers. Quite often I end up getting stuck looking for the character / word I'd like to use, only to discover the sentence I'm trying to build isn't the intended one. I then have to backtrack and figure out what is expected, and build that instead. (That's usually when I lose my timed practice.)
This means two things: First, even if the set of accepted answers increases, when using the word bank I'm training not fluency and comfort in the language, but rote memorization of Duolingo's preferred translations of set phrases. The problem presented isn't to translate the sentence, it is to find the expected translation. Period. Second, the small number of extra characters means that problem is more of a jigsaw puzzle than a writing question.
You could turn off the word bank, but it has advantages (speed, and it is the closest thing Duolingo has to a writing test since learner-accessible IMs are going to be pinyin-based). It is possible to improve it, though:
1) Present the union of characters used by the top 5 answers. This gives the learner more possibilities, and put more pieces on the board so they are actually building a sentence and not just re-arranging the words.
2) Break down character combinations into individual characters. It's frustrating (i.e. counterproductive to the learning process) when I've clicked on 吃 and spend time looking for 饭, only to discover that I should have picked the 吃饭 tile. It's also not particularly educational if those combinations are always presented together. "'Long time no see?' That's not 好-久-不-见, it's the four character blob."