Israelis can finally open a bank account over the Internet, after the Bank of Israel published directives on Thursday spelling out rules and regulations for online banking.
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The directives, one of the most significant steps Supervisor of Banks David Zaken has taken as he attempts to increase competition in banking, means there is no longer any need to come to a branch to open an account. However, the new directives do require that people opening an account online make their application by video-chat during which the applicant will have to show his official identification card and one other form of ID.
Banks have been preparing for the new rule for months, so the new service is expected to become available within days. Anyone over age 18 will be eligible.
Accounts opened online will be limited to maximum balances of 300,000 shekels ($87,820), with bank transfers limited to 50,000 shekels and individual withdrawals and deposits limited to 10,000 shekels per transaction, the Bank of Israel said. Transactions in excess of that will require that the account holder come to a branch. But clients who open accounts online will be able to apply for a credit card and checkbooks.
This move is expected to increase competition between banks by giving smaller banks with fewer branches a chance to reach a larger target population. Clients will also be able to utilize the new rules to open an account solely for the purpose of obtaining a bank loan.
Another, related reform ordered by Zaken will enable clients changing banks to transfer their fixed payments (hora’ot keva) online, starting next March, simplifying the task of changing banks and enhancing competition further. Only 4% of Israelis change banks in any given year because doing so is so complicated.
For borrowers, another competition-enhancing reform that is on the way is a so-called banking ID, which will provide the holder’s credit rating. This will allow someone to shop around for a loan and compare terms at several banks, including those unfamiliar with the borrower’s credit history.