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Israel Leads Fintech Innovation

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Friday, October 9th, 2015

The strength of Israel’s fintech ecosystem can be attributed to continued overseas interest, a commitment to innovation, and a community that’s dedicated to addressing the emerging needs of the industry.

The Israeli fintech industry continues to grow so impressively that it is attracting entrepreneurs and funding from global investors. For example, FundBox raised $90 million in two rounds, Payoneer attracted a similar amount and eToro raised $40 million, all in the past year.

In addition to the long list of successful fintech companies that have gone public or been acquired by leading players, many more Israeli startups are addressing emerging fintech sectors including payments; trading and investing; lending and financing; cryptocurrency; customer engagement; personal financial planning; anti-fraud; banking and insurance; and more.

What puts Israel at the forefront of finteech Innovation?

1. It has mastered the relevant technologies. Israel has a great deal of fundamental experience and knowledge in technologies that are relevant to the world of fintech, which is more personalized, consumer-friendly, and mobile to reach populations that aren’t able to get adequate financial services. Such technologies include expertise in real-time analytics, algorithmics, big data, risk management, anti-fraud, and security.

Israeli entrepreneurs also know how to apply online consumer-facing marketing knowledge, developed for sectors like gaming and adtech, coupled with sophisticated risk scoring algorithms to address the growing demand of P2P and SMB lending, with companies like eLoan, Blender, FundBox, eZbob, BlueVine, and Behalf that have attracted significant amounts of funding recently.

2. It has a legacy of successes.  Israeli fintech companies that have become leaders in their respective fields, such as Actimize in the area of fraud prevention, FundTech in the area of transaction banking solutions, Retalix in the area of point-of-sale, Trusteer in the area of cybercrime prevention, and Sapiens in the area of insurance. As a result, the local startup ecosystem has massive amounts of knowledge regarding the global fintech industry, leading to second ventures.

3. Global financial institutions have a presence here. Many global leaders of financial institutions understand that there is a great deal of innovation here in Israel that is relevant to them, and as a result, have either already created a presence here or are keen to create one in the form of R&D centers and accelerators. For example, Barclays and Citi have very large development centers in Israel, and Visa has recently announced its “Visa Europe Collab.” Also, some of the leading players in the financial market such as SunGard, PayPal, Intuit, and RSA have growing R&D centers here in Israel.

4. Global institutions are also investing here. There are visits by delegations on a weekly basis from the world’s leading financial institutions that are eager to tap Israeli technology. For example PingAn (a leading private Chinese financial services conglomerate) has invested both in Carmel and in Payoneer (a Carmel Ventures portfolio company) and eToro; Santander Ventures has invested in MyCheck.

5. Israeli financial institutions (both banks and credit card companies) are open to innovation. They constitute great ‘beta sites’ for local innovation, and many of them have beefed up their investments, now boasting highly professional innovation divisions of their own. Some of them are also involved with accelerators. For example, Bank Leumi joined forces with startup investment fund Elevator, and Bank Hapoalim joined the Microsoft Ventures Accelerator.

With an ecosystem that addresses the needs of both emerging and mature markets, Israeli fintech will only continue to be a good investment.


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