Billionaire Nacht submits plan to set up digital bank in Israel

Cybersecurity giant Check Point Software co-founder seeks to enter tight banking sector, where Bank of Israel is in favor of more competition

Shoshanna Solomon was The Times of Israel's Startups and Business reporter

Check Point Software Technologies co-founder Marius Nacht (Courtesy)
Check Point Software Technologies co-founder Marius Nacht (Courtesy)

Billionaire Marius Nacht, the co-founder of the Israeli cybersecurity giant Check Point Software Technologies Ltd., has formally submitted to the Bank of Israel a request to set up a digital bank in Israel, a spokesman for Nacht confirmed to The Times of Israel.

Calcalist first reported that Nacht submitted the request along with a business plan.

The cost of setting up such a bank is around $120 million, Calcalist said.

Nacht is leading a group of investors that has been in talks with Israel’s Banking Supervision Department at the Bank of Israel to get a permit to set up a digital bank in Israel, a source told The Times of Israel in May.

David Zaken, a former banking supervisor, is in charge of the negotiations between the group of investors and the Bank of Israel, the source said at the time. Nacht and his partner in the venture, Ezra Uzi Yemin, the CEO of energy company Delek US Holdings Inc., will jointly inject some $60 million into the initiative and plan to raise an additional $60 million from their other partners or via issuing shares on a stock exchange.

Illustrative image of digital banking (apichon_tee; iStock by Getty Images)

If Nacht gets the banking permit, it will be the first time in decades that a new bank has been set up in Israel.

Nacht and Yemin believe that the Israeli banking sector is on the cusp of a major technological revolution, and the two want to be at the forefront of this push.

There are five commercial banks operating in Israel, and the sector is dominated by the three largest: Bank Hapoalim Ltd., Bank Leumi Le-Israel Ltd. and Israel Discount Bank Ltd. In a bid to increase competition in the sector, make banks more efficient, and lower fees for consumers, the regulator has implemented reforms to boost the use of technology at the banks, helping cut costs and the number of branches and employees. The two largest banks have also been instructed to sell off their credit card units and the Banking Supervision Department has been seeking to promote the entry of a digital bank.

Hedva Ber, the Supervisor of Banks at the Bank of Israel, said at a conference in December that she hoped 2019 will see the setting up of a new digital bank as part of the central bank’s bid to inject competition in the sector.

“There are a number of bodies that are interested in the possibility of setting up a new bank” though they have not yet submitted a formal offer, she said.

Nacht and Yemin have told the regulator they wish to set up the bank under certain conditions, which include the state setting up an application programming interface (API), a technology protocol that allows diverse software components to communicate with each other, enabling a flow of information to increase competition; having regulations in place regarding insurance of saving accounts; and the existence of a body that will provide computing services to the banks. All of these conditions were part of recommendations made by a government panel set up to increase competition in the banking sector.

A spokesman for the Bank of Israel declined to comment.

Nacht is the co-founder of Check Point Software Technologies, which is traded in New York at a market value of some $16.7 billion. Last year, the billionaire entrepreneur also invested in a Swiss data-driven asset management startup, Numbrs, indicating that he sees innovative financial technologies as an investment opportunity. Nacht has also set up a healthcare fund that aims to invest in mid to late-stage life sciences companies in the field of digital health.

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