8 ms·

Israel's first new bank since 1978

64 points by theBashShell 6y ago

dogma1138 6y ago
I’m not sure it will last, Israel has an extremely tightly regulated banking sector, and major banks already offer a competitive digital platform. Unlike the EU where digital banks can start in a small market and then expand by using their passporting rights a bank in Israel is constrained to a rather small market.
- hyperrail 6y ago
  > major banks already offer a competitive digital platform. Did this improve a lot recently? Only 2 years ago, the Wall Street Journal described the inconvenience of Israeli banking this way: > Banking occupies a special place among the complaints of Israelis. Banks refuse to give out the phone number of a designated representative. Most basic functions can be dealt with only in person at the branch where an account was opened. > Tech workers - many of them American and European immigrants who came of age with mobile banking - can toil all day on some of the world's most advanced projects, only to find they can't email their bank any documents. Many Israeli banks demand documents in person, sent by mail or by fax. > when [Aliza Landes, a] 35-year-old American-Israeli [,] recently tried to send money electronically to pay for her wedding dress, the experience was less than high tech. It took two hours on the phone, and then a trip to her bank branch, where employees manually added the send-money function to her app. from https://archive.is/EongN https://archive.is/EongN / https://www.wsj.com/articles/whats-the-hot-device-in-startup-nation-the-fax-machine-11550765864 https://www.wsj.com/articles/whats-the-hot-device-in-startup...
  - tguvot 6y ago
    been with bank hapoalim, which is one of the larger banks. maybe this article relates to one of the worst banks. - i have a designated representative for 20 years or so (usually it happens when you have income above average I guess) - most of functions I could do via web site for many-many years. probably also via mobile app. - been emailing documents to my bank for 5 years at least - can make either local same day transfers or international transfers online, forever. with regards to "trip to branch where employees added send-money function to app", you need to sign agreement for performing operations online and stuff (probably part of regulations). till you do it, web banking is a bit limited. those days you can agree to it online i think
  - josh_fyi 6y ago
    This has not been my experience. It's quite easy to send money to any bank account even in another Bank. The online portal at my bank is pretty easy to use
  - crmd 6y ago
    I’m an American that had to work in Israel for a couple of years. Israeli banking is weird. For example I was often asked by my banker (Hapoalim) to hand write instructions/permission to do something on a piece of paper, take a picture of it with my phone, and text it to him. It’s hard to imagine a salty Chase Bank rep back home asking for this. Israel is this strange combination of first world and third world improvisational organized chaos mentality.
    - tguvot 6y ago
      Probably just "chain of evidence" to make sure there were no misunderstandings or something. Never had to do anything like this .
    - hakfoo 6y ago
      I wanted to close an account from a credit union in the States, mid-pandemic. I called, they said to email a support person. The support person told me to write a letter, photograph it with my identity card in the picture, and send it over. It felt strangely surreal.
  - llimos 6y ago
    Not my experience (with Bank Mizrahi). Can do almost anything on the web. Can even cash in checks by taking a picture of them on the app. Calling the central number for the bank directs the call automatically to my personal banker based on my caller ID. I haven't been to the branch in years. Although it is true that when you _do_ need to go in, you need to go to your own branch, which is something that surprised me coming from the UK.
    - simplyaccont 6y ago
      This is probably because accounts are branch specific and all your paperwork is there. If you want to move branch, your account number will change. Maybe one day they will "fix" it .
- beagle3 6y ago
  The most popular money transfer app (think Zelle), with about 80% or so of the market last I checked, iscalled Bit and operated by the largest bank (Hapoalim). It will not let you receive money or send it, unless you give it full access to your contacts -- even though it allows sending and receiving from non-contacts. Doesn't feel like there's any real competition there - the other competitors (Pepper and Paybox) don't seem to leave a mark. Hapoalim is definitely leveraging their might for digital dominance.
lr4444lr 6y ago
This article doesn't tell me what I really want to know, which is why a country with enormous FDI and GDP like Israel has gone almost 5 decades with no new banks. Is there a regulatory hurdle? Cultural taboos?
- hntrader 6y ago
  > gone almost 5 decades with no new banks Branchless banking seems like a capability enabled only in the last 15 years by widespread internet adoption among customers as well as a transition to a cashless economy in the last 5 years. Before then I'd imagine the physical startup costs and physical network effects of having hundreds of branches/ATMs, combined with low retail margins would've made it prohibitive for new competition.
- PEJOE 6y ago
  Corruption and regulatory capture are big ones in Israel. Small population and area also means harder to find a niche
  - flyinglizard 6y ago
    I don’t think corruption has anything to do with it (unless you can give any concrete example). Israel didn’t have new banks because the regulator preferred to protect the stability of the existing players, which are heavily regulated themselves. Israel had its share of troubles caused by banks in the 1980s and 1990s, and today banks are kept away from many asset classes and operations to ensure their stability and limit their clout. You could say that the banking regulators gave a limited amount of players a license to print money but they had to play by very particular rules on who owns them, what they do and how their balance sheet looks.
    - PEJOE 6y ago
      > Israel didn’t have new banks because the regulator preferred to protect the stability of the existing players Well said. Whatever the justification, protecting the profits of incumbents at the expense of new entrants is regulatory capture. And to your latter point, here is an example: in the US telecom providers are highly regulated, but they also have largely captured the FCC. Onerous amounts of regulation, contrary to perception, are good for incumbents. It makes launching a new business hard. Fighting through regulatory barriers is one challenge for some European startups trying to achieve scale and displace or match an incumbent. (Very low turnover in top 500 EU companies vs US too 500) Lastly I’d like to note that Israel has some room to improve on the corruption front - they are ranked as having higher perceived corruption than Spain and South Korea, two countries where the rich stay rich, and on par with Botswana. [0] And a bit below the US, where we already struggle with corruption and regulatory capture. [0] https://images.transparencycdn.org/images/CPI2020_Report_EN_0802-WEB-1_2021-02-08-103053.pdf https://images.transparencycdn.org/images/CPI2020_Report_EN_...
xeromal 6y ago
I was a customer of Simple's for several years and while it didn't pan out and they weren't really a "bank" but lipstick over one, I LOVED the modern touch on what is normally a cumbersome and painful experience. Kudos to any company that is trying to update the banking system. It could really use it.
alex_young 6y ago
“ Shashua said the bank will use artificial intelligence and other innovative technologies to meet customer needs.” AI for banking? Something like ‘our ML system said you don’t qualify for a loan’? Sounds so futuristic!
- andrepd 6y ago
  Not that the current state of affairs is any different. I long for a transparent algorithm (in the sense of "clear set of rules") that determine whether you can get credit or not.
  - thatfrenchguy 6y ago
    Good thing ML algorithms results are not even understood by folks who deploy them then :)
- jedberg 6y ago
  Nah, it already works that way. Your credit rating is basically a black box ML model.
  - navaati 6y ago
    Woosh :)
jtchang 6y ago
I know someone who was seriously trying to start a bank. After all his research he concluded that starting a bank from scratch was cost prohibitive. However buying an existing bank was way easier. For the US the amount of regulation that banks have to comply with is enormous. I'm not entirely sure all of it is value add. In contrast bitcoin has almost no regulations or controls around it. Is there not anything in between?
- User23 6y ago
  I looked into this as well. The most amusing aspect in NYS is that to get a banking license at least one of your board members has to be a good ol’ boy.
  - orhmeh09 6y ago
    What’s that mean? Someone on already another board?
    - User23 6y ago
      Basically. The regulations are intentionally vague and I believe my phrasing most clearly captured their actual operational meaning.
      - wdb 6y ago
        Personally, had more problems in EU than in US
        User23 6y ago
        I'd be very interested in hearing you elaborate on this please.
- jedberg 6y ago
  As they say, most safety regulations are written blood and banking regulations are written in lost gold. Pretty much every regulation is there because at some point someone figured out how to steal money from someone else, and the regulation prevents that. I don't really think there can be an in between. You either have a totally unregulated market like Bitcoin, where it's incredibly easy to steal from people with absolutely no recourse (not even the courts), or you have what we have now where your money is "safe" and if something happens anyway you can be made whole through the courts, which would then lead to new regulations to prevent that thing from happening again.
mensetmanusman 6y ago
It uses artificial intelligence, because real intelligence is not an option.
- marshmallow_12 6y ago
  that's quite a vague statement. Can you elaborate maybe. (if it's offensive, then maybe not)
joshgoldman 6y ago
Israel keeps getting better.
shaicoleman 6y ago
Direct link (In Hebrew, English coming soon, Google Translate broken): https://www.digibank.co.il/ https://www.digibank.co.il/
bsaul 6y ago
I’ve got a true admiration for this mobile eye cto, after seing a presentation he gave 4 years ago (can be found online), where he explained the current theoretical limitation of ML for autonomous driving, at the time where tesla was saying it was just around the corner. It takes some guts to publicly state « we have no clue how to do that thing our ex-customer now competitor claims is able to do , and we think nobody knows how to do it safely, and here’s why ». It’s even more exceptional when you compare it to the gigantic amount of crap that many israelis startup advertize , surfing on the reputation of the country for being a startup nation (i can’t count the number of cancer cure that i’ve seen israelis biotech companies claim)

64 points by theBashShell 6y ago

I’m not sure it will last, Israel has an extremely tightly regulated banking sector, and major banks already offer a competitive digital platform. Unlike the EU where digital banks can start in a small market and then expand by using their passporting rights a bank in Israel is constrained to a rather small market.

hyperrail 6y ago
> major banks already offer a competitive digital platform. Did this improve a lot recently? Only 2 years ago, the Wall Street Journal described the inconvenience of Israeli banking this way: > Banking occupies a special place among the complaints of Israelis. Banks refuse to give out the phone number of a designated representative. Most basic functions can be dealt with only in person at the branch where an account was opened. > Tech workers - many of them American and European immigrants who came of age with mobile banking - can toil all day on some of the world's most advanced projects, only to find they can't email their bank any documents. Many Israeli banks demand documents in person, sent by mail or by fax. > when [Aliza Landes, a] 35-year-old American-Israeli [,] recently tried to send money electronically to pay for her wedding dress, the experience was less than high tech. It took two hours on the phone, and then a trip to her bank branch, where employees manually added the send-money function to her app. from https://archive.is/EongN https://archive.is/EongN / https://www.wsj.com/articles/whats-the-hot-device-in-startup-nation-the-fax-machine-11550765864 https://www.wsj.com/articles/whats-the-hot-device-in-startup...
- tguvot 6y ago
  been with bank hapoalim, which is one of the larger banks. maybe this article relates to one of the worst banks. - i have a designated representative for 20 years or so (usually it happens when you have income above average I guess) - most of functions I could do via web site for many-many years. probably also via mobile app. - been emailing documents to my bank for 5 years at least - can make either local same day transfers or international transfers online, forever. with regards to "trip to branch where employees added send-money function to app", you need to sign agreement for performing operations online and stuff (probably part of regulations). till you do it, web banking is a bit limited. those days you can agree to it online i think
- josh_fyi 6y ago
  This has not been my experience. It's quite easy to send money to any bank account even in another Bank. The online portal at my bank is pretty easy to use
- crmd 6y ago
  I’m an American that had to work in Israel for a couple of years. Israeli banking is weird. For example I was often asked by my banker (Hapoalim) to hand write instructions/permission to do something on a piece of paper, take a picture of it with my phone, and text it to him. It’s hard to imagine a salty Chase Bank rep back home asking for this. Israel is this strange combination of first world and third world improvisational organized chaos mentality.
  - tguvot 6y ago
    Probably just "chain of evidence" to make sure there were no misunderstandings or something. Never had to do anything like this .
  - hakfoo 6y ago
    I wanted to close an account from a credit union in the States, mid-pandemic. I called, they said to email a support person. The support person told me to write a letter, photograph it with my identity card in the picture, and send it over. It felt strangely surreal.
- llimos 6y ago
  Not my experience (with Bank Mizrahi). Can do almost anything on the web. Can even cash in checks by taking a picture of them on the app. Calling the central number for the bank directs the call automatically to my personal banker based on my caller ID. I haven't been to the branch in years. Although it is true that when you _do_ need to go in, you need to go to your own branch, which is something that surprised me coming from the UK.
  - simplyaccont 6y ago
    This is probably because accounts are branch specific and all your paperwork is there. If you want to move branch, your account number will change. Maybe one day they will "fix" it .
beagle3 6y ago
The most popular money transfer app (think Zelle), with about 80% or so of the market last I checked, iscalled Bit and operated by the largest bank (Hapoalim). It will not let you receive money or send it, unless you give it full access to your contacts -- even though it allows sending and receiving from non-contacts. Doesn't feel like there's any real competition there - the other competitors (Pepper and Paybox) don't seem to leave a mark. Hapoalim is definitely leveraging their might for digital dominance.

lr4444lr 6y ago

This article doesn't tell me what I really want to know, which is why a country with enormous FDI and GDP like Israel has gone almost 5 decades with no new banks. Is there a regulatory hurdle? Cultural taboos?

hntrader 6y ago
> gone almost 5 decades with no new banks Branchless banking seems like a capability enabled only in the last 15 years by widespread internet adoption among customers as well as a transition to a cashless economy in the last 5 years. Before then I'd imagine the physical startup costs and physical network effects of having hundreds of branches/ATMs, combined with low retail margins would've made it prohibitive for new competition.
PEJOE 6y ago
Corruption and regulatory capture are big ones in Israel. Small population and area also means harder to find a niche
- flyinglizard 6y ago
  I don’t think corruption has anything to do with it (unless you can give any concrete example). Israel didn’t have new banks because the regulator preferred to protect the stability of the existing players, which are heavily regulated themselves. Israel had its share of troubles caused by banks in the 1980s and 1990s, and today banks are kept away from many asset classes and operations to ensure their stability and limit their clout. You could say that the banking regulators gave a limited amount of players a license to print money but they had to play by very particular rules on who owns them, what they do and how their balance sheet looks.
  - PEJOE 6y ago
    > Israel didn’t have new banks because the regulator preferred to protect the stability of the existing players Well said. Whatever the justification, protecting the profits of incumbents at the expense of new entrants is regulatory capture. And to your latter point, here is an example: in the US telecom providers are highly regulated, but they also have largely captured the FCC. Onerous amounts of regulation, contrary to perception, are good for incumbents. It makes launching a new business hard. Fighting through regulatory barriers is one challenge for some European startups trying to achieve scale and displace or match an incumbent. (Very low turnover in top 500 EU companies vs US too 500) Lastly I’d like to note that Israel has some room to improve on the corruption front - they are ranked as having higher perceived corruption than Spain and South Korea, two countries where the rich stay rich, and on par with Botswana. [0] And a bit below the US, where we already struggle with corruption and regulatory capture. [0] https://images.transparencycdn.org/images/CPI2020_Report_EN_0802-WEB-1_2021-02-08-103053.pdf https://images.transparencycdn.org/images/CPI2020_Report_EN_...

xeromal 6y ago

I was a customer of Simple's for several years and while it didn't pan out and they weren't really a "bank" but lipstick over one, I LOVED the modern touch on what is normally a cumbersome and painful experience. Kudos to any company that is trying to update the banking system. It could really use it.

alex_young 6y ago

“ Shashua said the bank will use artificial intelligence and other innovative technologies to meet customer needs.” AI for banking? Something like ‘our ML system said you don’t qualify for a loan’? Sounds so futuristic!

andrepd 6y ago
Not that the current state of affairs is any different. I long for a transparent algorithm (in the sense of "clear set of rules") that determine whether you can get credit or not.
- thatfrenchguy 6y ago
  Good thing ML algorithms results are not even understood by folks who deploy them then :)
jedberg 6y ago
Nah, it already works that way. Your credit rating is basically a black box ML model.
- navaati 6y ago
  Woosh :)

jtchang 6y ago

I know someone who was seriously trying to start a bank. After all his research he concluded that starting a bank from scratch was cost prohibitive. However buying an existing bank was way easier. For the US the amount of regulation that banks have to comply with is enormous. I'm not entirely sure all of it is value add. In contrast bitcoin has almost no regulations or controls around it. Is there not anything in between?

User23 6y ago
I looked into this as well. The most amusing aspect in NYS is that to get a banking license at least one of your board members has to be a good ol’ boy.
- orhmeh09 6y ago
  What’s that mean? Someone on already another board?
  - User23 6y ago
    Basically. The regulations are intentionally vague and I believe my phrasing most clearly captured their actual operational meaning.
    - wdb 6y ago
      Personally, had more problems in EU than in US
      - User23 6y ago
        I'd be very interested in hearing you elaborate on this please.
jedberg 6y ago
As they say, most safety regulations are written blood and banking regulations are written in lost gold. Pretty much every regulation is there because at some point someone figured out how to steal money from someone else, and the regulation prevents that. I don't really think there can be an in between. You either have a totally unregulated market like Bitcoin, where it's incredibly easy to steal from people with absolutely no recourse (not even the courts), or you have what we have now where your money is "safe" and if something happens anyway you can be made whole through the courts, which would then lead to new regulations to prevent that thing from happening again.

mensetmanusman 6y ago

It uses artificial intelligence, because real intelligence is not an option.

marshmallow_12 6y ago
that's quite a vague statement. Can you elaborate maybe. (if it's offensive, then maybe not)

joshgoldman 6y ago

Israel keeps getting better.

shaicoleman 6y ago

Direct link (In Hebrew, English coming soon, Google Translate broken): https://www.digibank.co.il/ https://www.digibank.co.il/

bsaul 6y ago

I’ve got a true admiration for this mobile eye cto, after seing a presentation he gave 4 years ago (can be found online), where he explained the current theoretical limitation of ML for autonomous driving, at the time where tesla was saying it was just around the corner. It takes some guts to publicly state « we have no clue how to do that thing our ex-customer now competitor claims is able to do , and we think nobody knows how to do it safely, and here’s why ». It’s even more exceptional when you compare it to the gigantic amount of crap that many israelis startup advertize , surfing on the reputation of the country for being a startup nation (i can’t count the number of cancer cure that i’ve seen israelis biotech companies claim)