On Sunday, the license to establish, manage and control a new bank – which its founders have dubbed “esh” – was granted by Bank of Israel Governor Prof. Amir Yaron and the Supervisor of Banks Yair Avidan to Yuval Aloni, Nir Tzuk, Alex Liberant and Alon Shine.
The governor also granted a bank holding permit to Prof. Shmuel Hauser (the former chairman of the Israel Securities Authority), who will serve as esh’s chairman.
esh will immediately offer current accounts to private, independent and corporate clients, but has future plans to offer deposit products, loans, payments and credit cards. To compete within the current bank market, esh boasts the advantage of being built using a modern and adaptive platform to which applications and developments can be added and implemented quickly according to customer needs.
“We built the bank in such a way that completely changes the cost structure, and the money saved will be transparently passed on to customers. I can personally guarantee that there will be no account management fees, we will not request the transfer of an existing account or salary, and that the following products will also include payment capabilities and the issuance of international credit cards for households and businesses,” wrote esh founder and CEO Yuval Aloni, in the launch announcement on the company’s website.
“esh is a banking technology group. Our goal is to accelerate the transition from traditional banking models to innovative models with mutual interest between the bank and the customer. We believe that efficiency resulting from automation and technological autonomy, embedded within a banking platform, creates better solutions,” Aloni wrote.
What is the importance of esh alongside other tech?
He further emphasized the importance that esh is putting in its technology-driven approach to banking. “It’s hard to imagine a reality where products like Gmail, Zoom or WhatsApp were operated manually by officials and committees, rather than by computer programs. This is the reality today in the banking industry. To change that, we at esh are taking a different approach – instead of using technology to help bankers, our bankers oversee the autonomous technology, which is constantly evolving and advancing.”
Prof. Shmuel Hauser, chairman of the board of directors of esh, emphasized the tech-forward approach of the new bank, noting that it enables better prices for end-clients and more opportunity for evolution down the road.
“The uniqueness of our bank is the synergy between technology and banking. This is a breakthrough Israeli technology that enables extraordinary operational efficiency which will be rolled out directly to customers. This will be reflected in attractive interest rates, services without commissions, no subscription fees and no preconditions such as salary transfer,” he said. “We are excited to receive the bank’s license; we have a long way to go.”
"We are excited to receive the bank's license; we have a long way to go.”Prof. Shmuel Hauser
Earlier this year, former Bank Leumi CEO Rakefet Russak-Aminoach explained to The Jerusalem Post the importance of disruption and innovation within Israel’s digital banking industry.
She explained that, in an era where fintech solutions are being offered by leaders such as Google and Amazon, the impetus is on Israel and its local financial organizations to offer modern and up-to-date solutions that meet the needs of today’s digital-first bank clientele. “If we don’t disrupt ourselves, someone else will,” she said, while acknowledging that local services do hold a certain advantage over global fintech providers due to, in part, familiarity.
Regardless, it will certainly be a challenge for rising financial technology companies and services to take a hold of significant market share. “What we have witnessed in the last decade is that b2c (business to customer) companies are struggling. It’s very difficult to acquire market share in financial services.”
While esh itself is not necessarily a fintech platform so much as a technologically-driven finance platform, the platform has seemingly been constructed to be open to the implementation of additional fintech applications, which could certainly give it a leg up over legacy banks in the country; while also drawing in more innovators in the fintech space to host their technology on esh’s platform.