The Israel Securities Authority grants initial licenses to fintechs

The first companies to receive a license are RiseUp, Finanda, Family Biz, and Green Invoice. Ten additional companies have submitted requests and are going through the licensing process.

Starting now these companies can offer, to interested consumers, a full financial report with comparative information regarding financial services, as long as they are granted the consumer's approval to receive accesses to their personal information currently being kept in banks, credit card companies, and additional financial companies. The consumers must approve the sort of information they received and the allotted time in which they allow the fintech companies access.

The licenses were granted through the reform of increasing competition in the financial ecosystem called ‘plus’.

Issuing these licenses is part of the recommendations of a reform that will contribute to increasing financial and banking services, for one by increasing the new players in financial services as fintech companies.

Reviewing the license requests

The Israel Securities Authority (ISA) aims to increase the competition in bank services in three ways: bringing in new players, offering the ability to move within players, and providing information, consumer information.

In the process of reviewing the license requests, ISA is checking the company's abilities to match the license requirements according to the law, regarding rules and instructions, including credibility demands, technological demands, keeping and maintaining advanced and appropriate information security, privacy protections, managing risks and cybersecurity, insurance demands or a deposit, as well as receiving allowance to supervise the company director.

On all the licensed companies there will be, amongst other things, a trust requirement, caution, and confidentiality towards their clients. Additionally, they will adhere to obligations in accordance with the law regarding storing the financial information and deleting it, not being allowed to transfer financial information other than within the confides of the law, requirements of disclosure, and prevention of a conflict of interest.

The transition period

The licensed companies will allow their consumers to choose the way their information is being used, to choose the banks, the accounts, and the information that the company is allowed to give access to their financial information, and the period of access to the information. After the initial permission from the consumers with the banks, the companies will be able to receive their financial information that the consumer allowed, with secure online technology and based on this to offer different services to the consumers.

Companies that operated in financial information before the law came out and sent a license request before the law came into effect will be able to keep supplying their consumers with existing technology as before the law came into effect, including the use of Screen scraping or in the ways they previously used, until the ISA made their decision regarding their license request or until the end of the transition period.