Straightforward article in the NY Times, suggests that the current wave of high rate savings accounts from online only banks may work this time around, because they are not tied to the core banking relationship chequing account which was the play in the first wave, circa 1997-99.

This time around basically everyone is copying ING with their terribly successful play at attracting high rates savings balances, which brings low transaction costs, and high balances.

Going Online for Savings – New York Times

Banks have trod a similar path before. In the late 1990’s, they introduced stand-alone Internet banks that paid high rates on checking accounts; the premise, then and now, was that the higher rates were affordable because the Internet took various costs out of the equation.

Those efforts crashed and burned, in part because people had not yet fully embraced Internet banking. Some analysts also fault the banks for leading with the primary checking account, which people are reluctant to switch; by contrast, people have no problem opening a new savings account that pays a high rate.

Relevance to Bankwatch:
Banking is sometimes simple, and the model that ING introduced, with high rates, and low transactional costs seems to work.

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