Asaf Erez, Digital Assets and Open Finance Lead at Israel Securities Authority, discusses Open Finance and its benefits for Israeli public and economy
As is well known, the hi-tech industry has been the engine behind the growth of the Israeli economy in recent decades. This industry is characterised, inter alia, by means of technological innovation and a scientifically and technologically sophisticated workforce. The financial technology (fintech) sector is one of the outstanding sectors in the Israeli hi-tech industry. Even though Israeli companies in this sector promoted competition to traditional financial systems across the world, through operational and technological innovation, they have preferred to avoid operating in Israel, up to now, because of the relatively small size of the market. Against this background, significant efforts have been made by the government in recent years to bring the achievements of the Israeli fintech companies abroad into the country for the benefit of the public in Israel and the benefit of the economy as a whole.
As a supplementary step, a Payment Services Law, which will apply similar principles to those that apply in PSD2 to the Israel payments services industry, is expected to be legislated soon.
Together with the desire to enable growth and the activity of Israeli fintech companies in Israel, the AIS Law assumes the existence of a regulatory infrastructure that will enable an AISP (Account Information Service Provider) that holds a foreign license, to operate under an Israeli license without the need for significant adaptation of that AISP’s operating and regulatory systems, and thus to take advantage of the unique characteristics of the Israeli regulation and the Israeli public’s high level of technological orientation, to provide a business advantage in other countries. The following factors are among the anchors upon which the attractiveness for foreign AISPs when considering activity in Israel rests:
Together with what is stated above, there is a significant thirst among the public in Israel for competition and innovation in financial services in the country, and the fact that there are hundreds of fintech companies operating from Israel provides opportunities for foreign companies to co-operate in the R&D field apart from targeting the Israeli public ISA’s license AISP.
We believe that AISPs, which are looking for new markets to enter, or which are looking for an operating environment that will enable innovation and the development of new products, will find that Israel is the correct place for them for development and trials.
October 2022
Credit information: the balance of the credit, the interest and the commissions that have been agreed regarding the credit, the timings for the repayment of the credit, and the existence of liens that have been provided against the credit.
November 2023
Information regarding savings: the amounts of the savings, interest, linkage, and commissions that have been agreed upon regarding the savings, the timings of the entitlement to the release of the monies from the savings, and the timing of the end of the saving period.
June 2023
Information regarding securities: the types of securities, transactions in securities, and commissions that are paid in respect of the securities portfolio.
Financial Products (as mentioned before) of non-bank financial institutions.
This article has first been published in the Open Banking and Open Finance Report 2022. Click here to download the report.
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