Israel is a big step closer to getting its first new bank in four decades after the Bank of Israel on Tuesday said it would grant a license and control permit for an all-digital bank, which is being formed by two of the country’s best-known high-tech entrepreneurs.
The digital bank, which will offer loans and deposits to households as well as securities-trading services, is led by Marius Nacht, a co-founder of the cybersecurity company Check Point Software Technologies, and Amnon Shushua, who co-founded the autotech company Mobileye, now owned by Intel.
The bank will have no bricks-and-mortar branches.
“The fact that two leading entrepreneurs — Mr. Marius Nacht and Prof. Amnon Shashua, who were one of the founders of Check Point and Mobileye respectively — are ground-breaking innovators in large industries, have chosen to invest their capital and their enthusiasm in establishing a new bank, is good news that indicates change,” said Hedva Ber, the Bank of Israel banks supervisor.
The bank marks an important step in the government’s policy of introducing more competition in the banking sector, which is dominated by five lenders. Two of them – Bank Leumi and Bank Hapoalim – were ordered to sell off their credit card units in the hope they will compete for consumer loans as a standalone businesses.
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But the central bank and the Finance Ministry have also been counting on wholly new entrants to the banking sector. Digital banking presents an opening because online banks don’t have the cost of operating branches.
The government has added other incentives for new players, among them a lower initial capital requirement as well as subsidies to open a joint computer service center for banks and credit unions, which is aimed at lowering costs further and assistance. The new bank a will also benefit from the credit database set up by the Bank of Israel that can be accessed by all lenders.
Nacht and Shashua, both of them with fortunes earned in high-tech, have each invested $30 million in the new bank and will hold a combined 50.1% stake. They are planning to line up other investors to put in at least another $60 million.
There remain other steps before the bank can begin operations, and the startup date isn’t expected before the year 2021.
Nacht these days in one of Israel’s leading technology investors, among other things through the healthcare venture capital fund aMoon. He has been chairman of Check Point, one of Israel’s biggest and oldest tech companies, since 2015.
After Intel bought Mobileye for $15.3 billion in 2017, Shashua stayed on as an Intel vice president. In addition, he is a founder and chairman of Orcam, a startup developing artificial vision devices for visually impaired people.
The bank’s staff includes ex-employees of Pepper, a digital bank owned and operated by Leumi that was launched two years ago. Among other people formerly associated with the digital bank was Dudu Zaken, a former banks supervisor who stepped down because of conflicts of interest issues.
Shuki Oren, a former Finance MInstry accountant general and today and entrepreneur and director for several companies, is the digital bank’s chairman.
The digital bank’s business plan was prepared by the accounting firm Kesselman & Kesselman PricewaterhouseCoopers. Among conditions that the Nacht-Shashua group set for launching the bank is the establishment of deposit insurance in Israel and launch of the computer service center,