I've been blogging about the inherent weakness surrounding online banking.  I've even used the toaster analogy when it comes to providing banks with an online banking promotion.  Instead of giving away a toaster, they should give away our online banking HomeATM.  Heck, it's less expensive than the promotions they are currently running and it would solve a problem.  It would eliminate phishing, it would eliminate fear, it would eliminate anxiety and it would eliminate the already obsolete username/password log-in procedure. 



It would attract customers looking for security, it would create trust, it would create loyalty and it would create peace of mind.  Why give away $125?  When that's gone there's nothing there.  Why not provide a promotion that "enables" the online banking customer to conduct safe and secure eCommerce transactions, such as funds transfers, online bill payments and more?



Here's an interesting article on the return of banking promotions.  Banks simply need to decipher what will have the strongest long-term impact.   I would use logic to infer that by giving away our Online Banking HomeATM, banks would not only drastically reduce fraud, but they would drastically increase loyalty and profit from the transactional revenue model derived each time a customer swiped their card in their new device in order to conduct a safe and secure "outside the browser" eCommerce payment...



From the Houston Chronicle:

Banks offering ‘free' money

Banks that survived the bust try new ways to entice customers

The banking industry has always been highly competitive. But as smaller banks fold in waves nationwide and the behemoths lumber on with government help, surviving companies are finding new ways to entice the customers who are fleeing their competitors.



Big banks are promoting their stability and security, while smaller banks are marketing the very fact that they're not the big banks. On every level, promotions abound.



“In the '80s it was: you open a checking account and get a toaster. Now we're harkening back to that,” said Dick Barnes, a marketing consultant for the Bellevue, Wash.-based Freeland Group. “You'll see some things in the next year or two that we haven't seen in decades.”



While Barnes mentions a Seattle-area bank that did give away toasters — “it was kind of tongue-in-cheek, but it was close to a $200 toaster” — most of the promotions are financial.



In targeted mailings, Chase Bank has been offering a $125 bonus for opening a new checking account. Bank of America and Citibank offered $100 bonuses over the summer.



That's not pocket change for the banks, considering that personal checking accounts alone tend not to be lucrative, and that opening a new account can cost them roughly $200 in administrative costs, experts say.



It's a gamble they're willing to take because the market's upheaval offers new opportunities to glean clients, and banks are anxious to shore up capital reserves.



“There's a lot of money in motion, and banks need to demonstrate core deposit growth,” said Les Dinkin, a managing director at the New York management consulting firm Novantas. “The kinds of offers range from financial incentives to rewards points to gadgets. We see offers ranging from iPods to Crock-Pots.”



‘Bribing people'



A promotion may get people in the door, but banks have to find a way to keep those customers, industry analysts warn. Otherwise they'll be out the door again the next time a competitor offers them $100.



“It's not building loyalty. It's not about what you do as a bank. It's more about bribing people,” said Adam Isler, client services director for PNT Marketing Services in New York. “Given the competitive environment, that kind of short-term thinking is getting a lot of play right now.”



Rewards programs are one way to ensure customers stay around longer and do more banking, Isler said. Companies like Chase and Capital One Bank use rewards to encourage customers to use their debit card, pay bills online, and take advantage of other features.



Chase has long offered rewards, said company spokesman Greg Hassell, but it is emphasizing them more lately and rolling out new benefits for current customers.



“The strategy behind that is to get the checking account as the core relationship. Then if you have that, you can get a better deal on your CD, on your mortgage, on your car loan,” he said. “You can deepen your relationship with the customers.”



Smaller financial institutions aren't offering incentives on the same scale, but many see their own opportunity in the chaotic market. They've upped their marketing efforts, promising good customer service without the flashy promotions.



“We don't really have what you might call loss leaders out there at this time,” said Graham Painter, executive vice president at Houston-based Sterling Bank. “We're pricing things effectively for the market and doing a lot of what you might call knocking on doors.”



‘A flight to safety'



Local credit unions, too, are finding newfound favor.



“As we watch the big banks implode, we see what you might call a flight to safety,” said Lucilla Henderson, vice president of marketing for TDECU, a credit union with 19 branches in Texas, 10 of them in the greater Houston area. “Basically our intent is to let (prospective customers) know that we're not responsible for this mess in regard to the nation's financial institutions.”



The company is also running a local promotion: Until the end of the month, members get a 30-cent-a-gallon gas discount at participating Buc-ee's stores.



As attractive as a cash bonus can be, some people say frustration with big banks makes them immune to the siren call of free money.



Orit Pennington banked with one of the giants for more than 15 years, but became fed up in recent months with new policies that she said put the bank's interests ahead of her own. Now the Houston small business owner banks with USAA, a company that offers online banking to military families. It didn't offer her an incentive to join.



“The $100 isn't worth it,” she said. jennifer.latson@chron.com