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New Israeli digital bank raises $120m with Asian, European investors

China’s Tencent, Japanese conglomerate SBI, and Swiss group Julius Baer back First Digital Bank, founded by Mobileye’s Amnon Shashua

Ricky Ben-David is The Times of Israel’s Tech Israel editor and reporter.

Illustrative image of artificial intelligence research, robots and banking (Blue Planet Studio; iStock by Getty Images)
Illustrative image of artificial intelligence research, robots and banking (Blue Planet Studio; iStock by Getty Images)

Israel’s first new bank in more than 40 years, the First Digital Bank (FDB), has raised a $120 million Series A funding round led by a group of prominent investors such as Chinese tech conglomerate Tencent, Japanese financial company SBI Holdings (formerly part of Softbank), and Swiss wealth management firm Julius Baer, one of Switzerland’s oldest banking institutions, the bank announced on Tuesday.

The investment values the First Digital Bank at $320 million, according to the announcement.

The fully digital bank, founded by tech entrepreneur Amnon Shashua, also the founder of autonomous driving systems company Mobileye (an Intel subsidiary), was approved by the Bank of Israel in 2019 and is currently operating in pilot mode, offering banking services to employees and their families. The bank said it was planning a soft launch, or a limited launch, to the Israeli public early next year and a future expansion into other international markets.

The bank has about 60,000 people on its waiting list and currently employs over 200 mission-driven people, CEO Gal Bar Dea told The Times of Israel on Tuesday.

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. In 2019, it was the first to receive a banking license in Israel in over 43 years.

The bank will have no branches and 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 customized service experiences for customers. It 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 First Digital Bank has said it hopes to “spearhead the autonomous banking transformation” using “proprietary AI tools and technologies” to offer households “a private banking service experience designed to proactively support their everyday financial challenges – from cashflows to budgeting, credit, savings, investments and more – saving them time, money and financial stress.”

Bar Dea said the bank will use the funds to “continue building its technology” and putting in place the support systems ahead of the launch, pointing to “incredible opportunities” in the Israeli market where “42% of households are dissatisfied with their existing banks, according to Bank of Israel research.”

From left: First Digital Bank CEO Gal Bar Dea, founder Amnon Shashua and chairman Shuki Oren. (Yanai Yechiel and Yonatan Hefner)

“We have very ambitious targets in a tight market where people don’t really leave their banks,” even when they are not satisfied, said Bar Dea, and that’s because the existing alternatives are more of the same. “FBD has an opportunity to incentive people to move toward frictionless banking.”

“Netflix killed Blockbuster, Spotify disrupted the music industry, and Tesla left Ford and Mitsubishi behind in a trail of dust,” Bar Dea said back in May. 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.

Bar Dea is 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 also previously CEO of Bank Leumi Switzerland and CEO of real estate firm Kardan NV.

“FDB is now joining forces with highly reputable and financially strong global investors. Our new investors will enhance FDB’s resilience, enabling us to offer consumers a true alternative to the traditional banks in the market. We are excited about the immense impact this could have on Israeli households and are looking forward to working with our new investors to reach additional markets,” Bar Dea said in a statement Tuesday.

Shashua said the new investment was a “vote of confidence in our vision by global technology and financial leaders, [and] fuels our long-term strategic plans to transform the banking world, first in Israel and then globally.”

Professor Amnon Shashua, Intel senior vice president and president and CEO of Mobileye, stands with a self-driving vehicle from Mobileye’s autonomous test fleet, during an event at Nasdaq in New York City in 2021. (Mobileye, an Intel Company)

“I firmly believe that AI technology, that is currently transforming significant parts of our lives, can be the key to resolving the financial struggles faced by so many families worldwide,” he added.

Shashua had invested $65 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.

Shashua also participated in the bank’s Series A investment, announced on Tuesday, and will remain the controlling shareholder of the bank.

Additional investors in the current round included US private equity firm West Coast Equity Partners, the Hebrew University of Jerusalem Provident Fund, and Far East Ventures, the venture capital arm of Singapore’s Far East Organization.

Israel’s banking sector is undergoing significant reform that will pave the way for new financial services for customers at more competitive rates.

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