Israel’s second digital bank gets regulatory go-ahead

Israel’s banking regulator on Sunday approved a conditional license and control permit to a group of entrepreneurs to set up a new online bank, the second addition to the highly concentrated banking sector in three years.

The Bank of Israel said that its Department of Banking Supervision has completed the inspection process for the new institution called Ish Bank Israel.

The approval, it said, would allow the founders to go ahead and complete the mechanical, operational and regulatory preparations required for the commencement of the bank’s activities.

These include completing the development and testing phases of new technology and hiring a management team and bank staff.

The central bank said that it would take about one-and-a-half years for the bank to get back up and running.

“We have a long way to go,” said Samuel Hauser, Esch’s chairman. The bank will offer attractive interest rates and banking services without any commission, he added.

Last January, One Zero Digital Bank received final regulatory approval for a full banking license, becoming the first new Israeli bank in 43 years.

Israel’s banking system is highly concentrated and run by a handful of banks, with the two largest controlling more than half the assets in the region.

“We see great importance in the entry of banks and additional new players into the banking system in Israel, so that they contribute to increased competition and innovation in the financial system,” said Bank of Israel Governor Amir Yaron.