New Israeli digital bank starts offering services to clients in pilot run

The First Digital Bank, the only new lender in over 40 years, hopes to compete with incumbents; services will be extended to wider public later this year

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

Left to right: Amnon Shashua and Marius Nacht get a letter from Bank of Israel Governor Amir Yaron and Supervisor of Banks Hedva Ber, saying they will get a license to set up a digital bank in Israel (Courtesy)
Left to right: Amnon Shashua and Marius Nacht get a letter from Bank of Israel Governor Amir Yaron and Supervisor of Banks Hedva Ber, saying they will get a license to set up a digital bank in Israel (Courtesy)

Israel’s first new bank in more than 40 years has started trial operations, opening accounts and providing services for a small, closed number of clients, The First Digital Bank said in a statement.

The fully digital bank, approved by the Bank of Israel in 2019, hopes to open up services to the wider public toward the end of the year, the statement said.

Currently the bank has started offering services to employees and their families – several hundred people — to make sure everything runs smoothly, a spokeswoman for the bank said.

“The artificial intelligence revolution is here and has now reached banks as well,” said the founder of the bank, tech entrepreneur Amnon Shashua. “The banking industry is thirsty for innovation and competition.”

Amnon Shashua (Yonatan Hepner)

The First Digital Bank is an independent bank that hopes to compete with the nation’s five largest banking groups, which today hold some 98% of the market.

The branchless bank will operate by integrating human bankers — who provide around-the-clock customer service through online chat and a call center — with advanced artificial intelligence-based technology that aims to “create a customized service experience for each and every customer,” the statement said.

The process of opening an account will be completely online, will not require the services of a human representative, and will come with an immediate credit limit approval process.

Like other banks, the lender is under the supervision of the Bank of Israel and will offer all existing banking services, including personal accounts, joint accounts, loans, deposits, credit cards, stocks, guarantees, standing orders, and foreign currencies. Mortgages will be added to the list of offerings in the future.

The bank has also signed an issuance and operation agreement with Isracard Group, a credit card provider, and has joined the Israeli Stock Exchange as a member, to offer its clients an advanced trading platform in Israel and in the US, the statement said.

In the third quarter of 2021, the bank will open its services to 1,000 additional customers from the public; these new customers will be partners in the bank’s development before it officially opens its doors to the wider public, toward the end of 2021.

On Sunday the bank also launched a website, through which it will be possible to sign up for updates and register to join a waiting list ahead of the wider opening at the end of the year, the statement said.

The CEO of the bank is Gal Bar Dea, one of the founders of Pepper, the digital banking venture of the Leumi Group. The chairman of the new bank is Shouky Oren, who served as the accountant general of the Finance Ministry in 2007-2011. Oren was previously CEO of Bank Leumi Switzerland and CEO of real estate firm Kardan NV.

The First Digital Bank is owned by Shashua, the co-founder of Mobileye, a maker of self-driving technologies that was bought by Intel Corp. in 2017 for $15.3 billion, and OrCam, a maker of devices to assist the visually impaired.

Shashua has invested $60 million of his own capital into the initiative. Tech entrepreneur Marius Nacht, the co-founder of cybersecurity firm Check Point Software Technologies and the founder of aMoon Fund, which invests in healthcare technologies, was also a co-founder of the bank but exited the venture last year.

The bank, which has 140 workers and whose official bank number 18, is expected to raise additional funds in the near future to expand its operations, the statement said.

“Netflix killed Blockbuster, Spotify disrupted the music industry, and Tesla left Ford and Mitsubishi behind in a trail of dust,” Bar Dea, the CEO of the First Digital Bank, said in the statement. The banking industry is one of the only industries that has yet to undergo a major revolution, he said, and the new bank is offering a “new model” of banking.

Having a bank that is free of “outdated computer systems, hundreds of branches, and an expensive operational system” will allow more a more efficient operation that will save customers money, said chairman Oren.

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