The Supervisor of Banks spoke today on the issue of Innovation in Banking and in the World of Finance as part of the Calcalist Fintech 2018 Conference.  The following are the main points of her remarks:


  • The developing technology over the past few years is dramatically changing the world of finance in all forms.  In many countries, payments are moving to smartphones, and tech giants are beginning to offer more and more financial services.
  • Technological development is enabling the development of new financial competitors to traditional banks. Technology companies have become fintech platforms that essentially constitute an alternative to banks and offer customers a variety of financial services (companies such as Alibaba and Tencent in China, for instance).
  • Technological innovation enables the establishment of “thin” digital banks, with a far more efficient business model and with significantly lower efficiency ratios than the banks.  In addition, this innovation enables “financial inclusion”—access to credit for customers that previously had no such access.
  • The existing banks are being forced to accelerate their adjustments to the new and changing world.  The Bank of Israel is encouraging the banking system to adopt these technologies.
  • The Banking Supervision Department is diligently leading the technological change.  At the end of 2016, the Department established a dedicated division for technology and innovation. The division is working to lower regulatory barriers that are delaying innovation, adjust risk management to a changing environment, lead broad infrastructure projects (such as API open banking that will make all customer data accessible to all players subject to the customer’s approval, transition between banks at a click, and more), and guide the banks in providing digital education—training the public and acquainting it with the digital environment.  
  • Another large project that will contribute greatly in this context is the Central Credit Register currently being established at the Bank of Israel, which will enable the sharing of all customer information between the banks and nonbank entities, allowing them to make better offers to customers.
  • We have recently seen many cooperative ventures between banks and fintech companies. The Banking Supervision Department is encouraging such cooperation, and believes that they will contribute to customers, banks and the fintech companies.
  • Against the background of the significant technological developments and the opportunities they create, a number of parties have approached the Banking Supervision Department to establish a new bank.  These are digital entities that are planning to focus on households and small businesses. The Banking Supervision Department is closely guiding them in them in the process.
  • In view of this, we estimate that in the coming year, a license will be issued for a new bank in Israel.​