Innovation community aims to place Israel at heart of fintech revolution

Tel Aviv-based innovation lab CREATORS will manage the community, tasked with making connections between relevant players in the field, identifying challenges to innovation.

Economy Minister Eli Cohen. (photo credit: PR)
Economy Minister Eli Cohen.
(photo credit: PR)
Regulators, banks and entrepreneurs joined forces to open Israel’s “FINnovation” community on Tuesday. The government-backed program aims to place Israel at the center of the rapidly growing financial- and insurance-technology industries.
Initiated by the Economy Ministry, the FINnovation community will serve as a bridge between public and private stakeholders, creating an increasingly favorable regulatory ecosystem for start-ups, venture-capital funds and financial institutions.
Key markets for Israeli fintech innovators are inevitably located worldwide rather than at home. But easing domestic regulation will help more fintech and insur-tech companies in Israel and allow Israeli citizens to gain greater access to technologies typically marketed abroad.
Tel Aviv-based innovation lab CREATORS will manage the community. It is tasked with making connections between relevant players in the field, identifying challenges to innovation and organizing industry events and mentoring opportunities.
“Israel has a fantastic brand across the world, thought of as the nation of innovation, and there are several fields where we are considered global leaders,” Economy Minister Eli Cohen said.
“The financial world is changing in front of our eyes, and there are countries in the Far East that are significantly ahead of us,” he said. “This is an opportunity to turn to the regulators, and every one should do what is necessary for protecting their institutions but also enable a supportive environment for innovation. Not just for Israeli citizens to enjoy, but so that we will see financial companies growing in Israel and providing services all over the world.”
According to Findexable’s Global Fintech Index, published in December, Tel Aviv is No. 18 global fintech hub. The rankings are based on regulation, human capital, incentives, networking and the number of start-ups. San Francisco Bay leads the index by some margin, followed by London, New York and Singapore.
Worldwide, there are 58 fintech unicorns, or start-ups exceeding a valuation of $1 billion. They are leading the highly anticipated fintech revolution and hope to transform the way we handle our finances. Four Israeli companies are counted among the expanding group.
Demonstrating the lucrative future of fintech, payment giant Visa announced on Tuesday it would acquire a San Francisco-headquartered fintech company for $5.3b.
“We all speak about the Start-Up Nation, but where is the impact of all the start-ups on the economy?” said Dr. Ami Appelbaum, chairman of the Israel Innovation Authority and chief scientist of the Economy Ministry. “How can it be that we are not in the top 10 countries in terms of GDP per capita?”
“For our innovative abilities to have an impact on our economy, the first thing that is necessary to do is to bring the players together,” he said. “Here is a community that brings regulators, policy makers and industry to sit together. I see this community as the leverage that will take the Start-Up Nation to the next stage: the Scale-Up Nation.”
The fintech and insur-tech community represents one of a series of innovation communities planned by the Economy Ministry, including similar initiatives in the field of smart transportation, digital health, smart construction and education.
Progress in regulatory reform has borne fruit in recent months, leading to the approval of Israel’s first digital bank last September. The establishment of a new digital insurance company is expected to be approved later this week.