[HN Gopher] Israel's first new bank since 1978
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Israel's first new bank since 1978
Author : theBashShell
Score : 61 points
Date : 2021-03-14 15:17 UTC (7 hours ago)
(HTM) web link (www.reuters.com)
(TXT) w3m dump (www.reuters.com)
| dogma1138 wrote:
| I'm not sure it will last, Israel has an extremely tightly
| regulated banking sector, and major banks already offer a
| competitive digital platform.
|
| Unlike the EU where digital banks can start in a small market and
| then expand by using their passporting rights a bank in Israel is
| constrained to a rather small market.
| hyperrail wrote:
| > _major banks already offer a competitive digital platform._
|
| Did this improve a lot recently? Only 2 years ago, the Wall
| Street Journal described the inconvenience of Israeli banking
| this way:
|
| > _Banking occupies a special place among the complaints of
| Israelis. Banks refuse to give out the phone number of a
| designated representative. Most basic functions can be dealt
| with only in person at the branch where an account was opened._
|
| > _Tech workers - many of them American and European immigrants
| who came of age with mobile banking - can toil all day on some
| of the world 's most advanced projects, only to find they can't
| email their bank any documents. Many Israeli banks demand
| documents in person, sent by mail or by fax._
|
| > _when [Aliza Landes, a] 35-year-old American-Israeli [,]
| recently tried to send money electronically to pay for her
| wedding dress, the experience was less than high tech. It took
| two hours on the phone, and then a trip to her bank branch,
| where employees manually added the send-money function to her
| app._
|
| from https://archive.is/EongN /
| https://www.wsj.com/articles/whats-the-hot-device-in-startup...
| tguvot wrote:
| been with bank hapoalim, which is one of the larger banks.
| maybe this article relates to one of the worst banks.
|
| - i have a designated representative for 20 years or so
| (usually it happens when you have income above average I
| guess)
|
| - most of functions I could do via web site for many-many
| years. probably also via mobile app.
|
| - been emailing documents to my bank for 5 years at least
|
| - can make either local same day transfers or international
| transfers online, forever.
|
| with regards to "trip to branch where employees added send-
| money function to app", you need to sign agreement for
| performing operations online and stuff (probably part of
| regulations). till you do it, web banking is a bit limited.
| those days you can agree to it online i think
| josh_fyi wrote:
| This has not been my experience. It's quite easy to send
| money to any bank account even in another Bank. The online
| portal at my bank is pretty easy to use
| llimos wrote:
| Not my experience (with Bank Mizrahi).
|
| Can do almost anything on the web. Can even cash in checks by
| taking a picture of them on the app. Calling the central
| number for the bank directs the call automatically to my
| personal banker based on my caller ID. I haven't been to the
| branch in years.
|
| Although it is true that when you _do_ need to go in, you
| need to go to your own branch, which is something that
| surprised me coming from the UK.
| simplyaccont wrote:
| This is probably because accounts are branch specific and
| all your paperwork is there. If you want to move branch,
| your account number will change. Maybe one day they will
| "fix" it .
| crmd wrote:
| I'm an American that had to work in Israel for a couple of
| years. Israeli banking is weird. For example I was often
| asked by my banker (Hapoalim) to hand write
| instructions/permission to do something on a piece of paper,
| take a picture of it with my phone, and text it to him. It's
| hard to imagine a salty Chase Bank rep back home asking for
| this. Israel is this strange combination of first world and
| third world improvisational organized chaos mentality.
| tguvot wrote:
| Probably just "chain of evidence" to make sure there were
| no misunderstandings or something. Never had to do anything
| like this .
| lr4444lr wrote:
| This article doesn't tell me what I really want to know, which is
| _why_ a country with enormous FDI and GDP like Israel has gone
| almost 5 decades with no new banks. Is there a regulatory hurdle?
| Cultural taboos?
| llimos wrote:
| Banks are so tightly regulated that they all offer pretty much
| identical options at identical prices. Shopping around, it's
| virtually impossible to find any differentiator between them.
| They don't even advertise based on differentiation, it's more
| things like 'our call center people are more polite than
| theirs'.
| tpetry wrote:
| Absolutely the opposite. Fintech and online-only banks have
| allowed so much new things to differentiate to the old banks.
| The concept of privacy.com with securing your online credit
| card purchase, revolut's ability to get rid of money exchange
| fees or just the many app banks.
| yoavm wrote:
| I think the parent post was talking about the Israeli
| market. There is no Privacy.com, Revolut etc in Israel.
| hntrader wrote:
| > gone almost 5 decades with no new banks
|
| Branchless banking seems like a capability enabled only in the
| last 15 years by widespread internet adoption among customers
| as well as a transition to a cashless economy in the last 5
| years.
|
| Before then I'd imagine the physical startup costs and physical
| network effects of having hundreds of branches/ATMs, combined
| with low retail margins would've made it prohibitive for new
| competition.
| PEJOE wrote:
| Corruption and regulatory capture are big ones in Israel. Small
| population and area also means harder to find a niche
| flyinglizard wrote:
| I don't think corruption has anything to do with it (unless
| you can give any concrete example).
|
| Israel didn't have new banks because the regulator preferred
| to protect the stability of the existing players, which are
| heavily regulated themselves. Israel had its share of
| troubles caused by banks in the 1980s and 1990s, and today
| banks are kept away from many asset classes and operations to
| ensure their stability and limit their clout.
|
| You could say that the banking regulators gave a limited
| amount of players a license to print money but they had to
| play by very particular rules on who owns them, what they do
| and how their balance sheet looks.
| PEJOE wrote:
| > Israel didn't have new banks because the regulator
| preferred to protect the stability of the existing players
|
| Well said. Whatever the justification, protecting the
| profits of incumbents at the expense of new entrants is
| regulatory capture.
|
| And to your latter point, here is an example: in the US
| telecom providers are highly regulated, but they also have
| largely captured the FCC.
|
| Onerous amounts of regulation, contrary to perception, are
| good for incumbents. It makes launching a new business
| hard.
|
| Fighting through regulatory barriers is one challenge for
| some European startups trying to achieve scale and displace
| or match an incumbent. (Very low turnover in top 500 EU
| companies vs US too 500)
|
| Lastly I'd like to note that Israel has some room to
| improve on the corruption front - they are ranked as having
| higher perceived corruption than Spain and South Korea, two
| countries where the rich stay rich, and on par with
| Botswana. [0] And a bit below the US, where we already
| struggle with corruption and regulatory capture.
|
| [0] https://images.transparencycdn.org/images/CPI2020_Repor
| t_EN_...
| flyinglizard wrote:
| The list you cite is "corruption perception", not
| corruption per se. other lists such as GCI rank Israel
| (20th) roughly on par with Japan (18th) [0]
|
| The banking regulators in Israel are quite upfront about
| their objectives of maintaining banking sector stability
| even at the cost of competition or cost to consumers.
| They even oversee banking boards.
|
| [0] https://risk-indexes.com/global-corruption-index/
| PEJOE wrote:
| Israel does rank very favorably on this list - I wonder
| why the perception of corruption, among businesses, is so
| much higher the measure posited by risk-indexes.com?
|
| Perhaps one reason is that the perceived corruption
| ranking that I shared is just that, while your measure
| dilutes "Corruption Perception," and "Corruption
| Experience," to just 42.5% of the measure, filling in the
| majority of the corruption measure with:
| - Ratification status of Conventions - Citizen's
| Voice and Transparency - Government Functioning and
| Effectiveness - Legal Context - Political
| Context - White collar Crimes
|
| Which to me, in the context of evaluating "Why have there
| been no new banks in Israel since 1978?" are not as
| useful as just the combined experiences of companies who
| are financially exposed to Israeli government decision
| making.
|
| (source: https://risk-indexes.com/wp-
| content/uploads/2019/10/GCI_Tech...)
|
| That said, clearly closed room deal-making is not the
| only challenge to new banks in Israel. It is a small
| market.
|
| China, who does poorly on many measures of corruption,
| but does have a relatively robust market, has many banks
| to serve its massive population:
| https://en.wikipedia.org/wiki/List_of_banks_in_China
|
| One difference is that corruption in China is often local
| (federalized corruption?): if you can't get something
| done in Guangzhou maybe you move it to Changchun and you
| can. That option doesn't exist in Israel.
| tguvot wrote:
| >Israel does rank very favorably on this list - I wonder
| why the perception of corruption, among businesses, is so
| much higher the measure posited by risk-indexes.com?
|
| A few factors:
|
| - In Israel corruption is very aggressively prosecuted
| and will be featured on national news (the only kind of
| news. no local news there) repeatedly. It creates
| impression that corruption is everywhere
|
| - Orthodox sector due to it's influence gets non-
| proportional amounts of money from budgets
|
| - Everybody afraid to be a freier
| (https://www.latimes.com/archives/la-
| xpm-1997-jul-25-mn-16208...), so in case somebody else
| succeeds, some may assume that it's because of
| corruption, etc
|
| - Having personal relations with somebody or been friend
| of a friend helps (to speed up a bit small things. no
| monetary exchange, just a favor)
|
| PS. Couldn't find raw data from Israel for index
| PEJOE wrote:
| tguvot,
|
| Some very interesting anecdote points - I'll say my
| personal references are an old boss, who is close to
| Israeli politics in the US, and Israeli emmigrants. (Main
| complaint was they liked forests and green more than the
| desert.)
|
| I appreciate your context; and I did request the dataset
| from the risk-index organization, and will update here if
| I receive it.
| marshmallow_12 wrote:
| I am inclined to agree with you. Israel is famous for it's
| beuracracy. It is enormously damaging to the economy and
| actively aids monopolies. This extends to individuals too, as
| any unfortunate soul unlucky enough to get lost in an Israeli
| government office can attest. This means that banks can act
| with impunity, especially since to transfer larger sums of
| money, one needs to do so via the bank by law. I suspect
| theres a large amount of corruption there. I hope this new
| bank can help a little.
| xeromal wrote:
| I was a customer of Simple's for several years and while it
| didn't pan out and they weren't really a "bank" but lipstick over
| one, I LOVED the modern touch on what is normally a cumbersome
| and painful experience.
|
| Kudos to any company that is trying to update the banking system.
| It could really use it.
| alex_young wrote:
| " Shashua said the bank will use artificial intelligence and
| other innovative technologies to meet customer needs."
|
| AI for banking? Something like 'our ML system said you don't
| qualify for a loan'? Sounds so futuristic!
| andrepd wrote:
| Not that the current state of affairs is any different. I long
| for a transparent algorithm (in the sense of "clear set of
| rules") that determine whether you can get credit or not.
| thatfrenchguy wrote:
| Good thing ML algorithms results are not even understood by
| folks who deploy them then :)
| jedberg wrote:
| Nah, it already works that way. Your credit rating is basically
| a black box ML model.
| navaati wrote:
| Woosh :)
| bsaul wrote:
| I've got a true admiration for this mobile eye cto, after seing a
| presentation he gave 4 years ago (can be found online), where he
| explained the current theoretical limitation of ML for autonomous
| driving, at the time where tesla was saying it was just around
| the corner.
|
| It takes some guts to publicly state << we have no clue how to do
| that thing our ex-customer now competitor claims is able to do ,
| and we think nobody knows how to do it safely, and here's why >>.
|
| It's even more exceptional when you compare it to the gigantic
| amount of crap that many israelis startup advertize , surfing on
| the reputation of the country for being a startup nation (i can't
| count the number of cancer cure that i've seen israelis biotech
| companies claim)
| joshgoldman wrote:
| Israel keeps getting better.
| jtchang wrote:
| I know someone who was seriously trying to start a bank. After
| all his research he concluded that starting a bank from scratch
| was cost prohibitive. However buying an existing bank was way
| easier.
|
| For the US the amount of regulation that banks have to comply
| with is enormous. I'm not entirely sure all of it is value add.
| In contrast bitcoin has almost no regulations or controls around
| it. Is there not anything in between?
| 0x4d464d48 wrote:
| Banks make loans. Banks are expected to have sufficent cash
| reserves to service all of their customer accounts. If a bank
| fails, account holders dont get their money back aside from
| whats insured by the FDIC and only up to 250k$.
|
| Bitcoins are literally just pieces of a digital ledger system.
| No loans and all units of account are depedant exclusively on
| the ledger.
|
| Regulating a bank is required because banks take in capital
| from account owners and take on additional risk by loaning that
| capital to others which may or may not get paid back. If banks
| lose money from bad loans to a point they dont have the cash
| available to service customer accounts the only thing they can
| tell people trying to make a withdrawel is 'tough titty'.
|
| You don't have that problem with bitcoin. You get many other
| problems with it, volatile pricing and a complete inability to
| control money supply, but that's not one of them.
| liveoneggs wrote:
| are you kidding? starting a bank in the US is ridiculously easy
| compared to most countries.
| missedthecue wrote:
| Don't think that's really true, unless by "most countries"
| you mean countries where the financial system is exclusively
| state owned
|
| https://cdn.ilsr.org/wp-content/uploads/2019/05/number-of-
| ne...
| ryanmarsh wrote:
| That's what I thought till I met someone who owned a bank.
| yoavm wrote:
| That still doesn't mean that starting a bank in the US is
| harder (or at least as hard) than it is elsewhere, right?
| Or maybe that person owned banks all around the world?
|
| From reading a little online, it sounds way easier to start
| a bank in the US than it is in Israel.
| ryanmarsh wrote:
| LOL then start one
| adrr wrote:
| Why do you need a banking license? There are lots of challenger
| banks that have no banking licenses. In between is a money
| transfer license and just dealing with anti money laundering
| and know your customer regulations. I don't even think PayPal
| or square have a banking license. Neither does apple with their
| apple wallet cash functionality.
| User23 wrote:
| I looked into this as well. The most amusing aspect in NYS is
| that to get a banking license at least one of your board
| members has to be a good ol' boy.
| orhmeh09 wrote:
| What's that mean? Someone on already another board?
| User23 wrote:
| Basically. The regulations are intentionally vague and I
| believe my phrasing most clearly captured their actual
| operational meaning.
| wdb wrote:
| Personally, had more problems in EU than in US
| ryanmarsh wrote:
| I was employee #3 at a startup funded in part by a guy who
| started a small local bank. I talked to him about his real
| estate investments and the bank. Upon my inquiry of how one
| actually starts a bank he replied, "owning property is a right,
| owning a bank is a privilege". Meaning, merely being wealthy
| enough to start a bank does not mean one can do so. I wonder
| how many children he had to sacrifice to moloch to get into the
| club.
| jedberg wrote:
| As they say, most safety regulations are written blood and
| banking regulations are written in lost gold.
|
| Pretty much every regulation is there because at some point
| someone figured out how to steal money from someone else, and
| the regulation prevents that. I don't really think there can be
| an in between.
|
| You either have a totally unregulated market like Bitcoin,
| where it's incredibly easy to steal from people with absolutely
| no recourse (not even the courts), or you have what we have now
| where your money is "safe" and if something happens anyway you
| can be made whole through the courts, which would then lead to
| new regulations to prevent that thing from happening again.
| rubicon33 wrote:
| How is it incredibly easy to steal Bitcoin from someone?
| jedberg wrote:
| Remember that stealing isn't just one person taking it from
| another. It's also institutional theft. See Mt. Gox as a
| prime example. Lots of people lost a lot of bitcoins.
|
| If that were a regulated bank, the government would make
| them whole.
| iso1210 wrote:
| $5 wrench*
|
| Far easier with bitcoin than in the olden days when you had
| to physically transfer cash (and then have the issue of
| laundering it)
|
| * https://xkcd.com/538/
| igammarays wrote:
| The amount thieves have gotten away with (several $100m+
| crypto heists) is comparable to the total amount that has
| been legitimately spent using crypto for actual goods and
| services (not counting "investing") in the entire crypto
| economy.
|
| https://mobile.twitter.com/patio11/status/12295799627740160
| 0...
| lgessler wrote:
| i assume gp's talking about double spending
| iso1210 wrote:
| I didn't get that, but it's a legitimate problem. There's
| a chance that at some point some organization (say the
| Chinese government) will have enough resources to
| takeover the blockchain, at which point you're at the
| mercy of them, with no recourse.
| CorpOverreach wrote:
| Maybe "incredibly easy" isn't the right term for _stealing_
| it - but once it's stolen it's easy to get away with it.
| This is especially true if you're managing your own
| wallet/private keys/etc.
|
| If you're not careful with your machine, all it takes is
| some piece of malware lurking in the background to keylog
| your password, decrypt your wallet's private key, get the
| funds transferred from your wallet to the hacker's, and
| _poof_ all your crypto is gone. That 's game over. It's
| gone. No court or government can get it back for you unless
| they send a SWAT team to go steal the private key from the
| people who stole it from you.
|
| If you're relying on Coinbase or another exchange to host
| your wallet for you, that's a different story, but at that
| point they're fulfilling a similar role that a bank does
| for you.. which to some is entirely what they're trying to
| get away from by using Bitcoin and such.
| unethical_ban wrote:
| I understand the concept, but that doesn't justify the level
| of government interference we have in the banking industry.
|
| I'm in IT security for a financial institution, and we have
| regulators checking the permissions of our NTP configs and
| that IPV6 is disabled on our cloud instances.
|
| Those are two trivial examples out of 10,000 I could give on
| how there is a cottage industry of regulators and consultants
| and auditors making things over complex, milking money from
| banks, and generally making it harder to do your job because
| one time, this one place had this one issue.
|
| Frankly, I'd like to get out of the banking industry because
| of how stupid all this shit is - most auditors don't even
| know what they're talking about. It'd be like hiring some HN
| commenters to review the schematics of the 737 for safety.
| sn_master wrote:
| What's the advantage of having IPv6 disabled?
| jedberg wrote:
| If your firewall isn't configured correctly then it's
| really easy to directly access a host from the internet.
| It's easier for the regulator to just make sure ipv6 is
| off (and all of the ipv4 are private addresses) instead
| of verifying the firewall config.
| sn_master wrote:
| I see. Might as well just make sure everything is in a
| VPC.
| shaicoleman wrote:
| Direct link:
|
| https://www.digibank.co.il/
| mensetmanusman wrote:
| It uses artificial intelligence, because real intelligence is not
| an option.
| marshmallow_12 wrote:
| that's quite a vague statement. Can you elaborate maybe. (if
| it's offensive, then maybe not)
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