As we gave a cursory glance to the BankRate.com deposit rate table in today’s Wall Street Journal, we were surprised to see KeyDirect listed at the top of the Money Market and Savings Account section with a 3.66% APY and a $50 minimum deposit.

We were even more surprised to find that KeyDirect is not a small bank in the middle of Idaho, but a little-known division of KeyCorp, the $91 billion bank headquartered in Cleveland, Ohio. Key may be the first mainstream player to try to compete with the online-oriented direct banks such as ING DIrect, E*Trade Bank, and others. (See previous article.)

The success of Emigrant Direct, which said Monday that it has attracted more than 100,000 accounts with offers pasted all over BankRate.com, may encourage other traditional banks to test direct banking tactics. The New York-based bank said that the 100,000 accounts have an average balance of more than $30,000, meaning the bank has bagged more than $3 billion in deposits.

The next Online Banking Report (#120/121) will look at deposit gathering with a special emphasis in the high-rate game.

— JB