Israel’s banking regulator has granted a conditional licence to set up the country’s second digital bank, reported Reuters.
In a statement, the Bank of Israel said that its banking supervision department has concluded the review and inspection process for the new digital lender called Esh Bank Israel.
The founders will be able to proceed and finish the technical, operational, and regulatory preparations to start the bank after the permission.
These involve recruiting management teams and bank personnel as well as finishing the development of new technology and testing phases.
The entire process is expected to take around a year and a half, the central bank said.
According to the Times of Israel, Esh will be entirely online, have no physical locations, and cater to both individuals and small businesses by offering services such as credit, deposits and current accounts, as well as payment options.
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Shmuel Hauser, a former head of the Israel Securities Authority, will head the new digital bank as its chairman.
“We have a long way to go,” said Hauser. “The uniqueness of our bank is the synergy between technology and banking.”
Esh will offer “attractive” interest rates and provide banking without commission and subscription fees, Hauser added.
The digital bank is co-led by Palo Alto Networks founder Nir Zuk. Other founding members of the group include businessman Yuval Aloni and Kobi Malkin, who was previously the CEO of Bank Massad and will now serve as CEO of Esh.
The approval is part of the Bank of Israel’s efforts to boost competition in a sector, which is currently dominated by a handful of banks.
Bank of Israel Governor Amir Yaron said: “We see great importance in the entry of banks and additional new players into the banking system in Israel so that they contribute to increasing competition and innovation in the financial system.”
Last January, the Bank of Israel allotted a full banking licence to One Zero Digital Bank.