An Israeli Digital Bank May Only Be One Year Away, Says Local Regulator

A fully digital bank may only be one year away, according to Israeli banking regulator Hedva Bar. Speaking on Tuesday at the FinTech 2018 conference held in Tel Aviv by Calcalist, Bank Leumi, and KPMG, Ms. Bar said that both small and experienced entities have recently approached the Bank of Israel’s banking supervision department to receive a license to set up new digital banks specializing in credit for households.

For daily updates, subscribe to our newsletter by clicking here.

Ms. Bar said that the public should learn to utilize and rely on smartphones for banking and financial services, as it is a model that offers advantages such as simpler operations and increased efficiency. “The new technological financial players are much more efficient than traditional banks,” she said, adding that “banks have to understand they need to accelerate their adaption to the new age, as do insurance companies and capital management entities.”

Collaboration between banks and fintech entities is a win-win situation, Ms. Bar said. While more and more such partnerships can be seen in the domains of regulatory technology and payment and procedure automation, she said. When it comes to transferring payments, there is still a lot of room for improvement, she added.

Ms. Bar named China as an example of a country at the forefront of fintech innovations. “In China, people use their smartphones to pay shops and street vendors,” sha said. People who would not normally be approved for credit have a digital bank account, which they operate exclusively from their phones, Ms. Bar added.