Technology is transforming financial services. ‘Fintech’ is impacting our lives in the UK and beyond, with digital banking, contactless payments, robo-advice and other developments gaining huge popularity.
The pandemic has fast-tracked an already shifting process to fintech through advances in technology coupled with increasing consumer demands.
Two nations empowering resilience at a time of worldwide uncertainty with innovative solutions and partnerships are the UK and Israel.
In 2018, The City UK of London and The Fintech Community of Israel – City TLV signed a Memorandum of Understanding (MoU) to bolster fintech and cybersecurity cooperation between the two countries.
Shmuel Ben-Tovim, chairman of the Fintech Community of Israel, representing the entire Fintech ecosystem of Israel says: “There is a perfect match between the fintech environments of both countries. The UK is a much more meaningful global financial centre than Tel Aviv and can offer a launch pad for technologies originating in Israel, whereas Israel enjoys an entrepreneurial ecosystem and a better culture of risk-taking, supported by generous government schemes.
“The UK regulatory system is more advanced in critical areas such as Open Banking or Sandboxes – experimental regulators environments for fintech start-ups.”
Israel is a global leader in cybersecurity, a critical technology for UK financial institutions. One notable example is Citibank, that runs its global cyber innovation out of Tel Aviv.”
Otni Oron, fintech sector manager at the UK Israel Tech Hub at British Embassy Israel, says: “With the UK’s legacy as a leading financial capital going back centuries, it’s clear how its financial services industry brings such an advanced thinking when it comes to financial instruments, structures and regulation as well as adoption of advanced digital tools by customers. Israel, on the other hand, is a relatively young country which, in many senses, relies on innovation to survive.
Israeli tech strengths rely mainly on deep-tech and advanced mathematics – AI, machine learning, big data, and with much synergy among fintech’s related fields.”
He says all major UK banks and insurance companies are exploring Israeli fintech solutions to some extent. “Barclays and Natwest are intimately familiar with the Israeli industry, others are involved per specific interest or periodically for educational purposes.
“The relationship goes both ways with over 50 of Israeli tech companies establishing a presence or expanding significantly in the UK in 2019.”
Two companies using tech to transform banking are Israeli-founded The Floor and the UK-based Railsbank, which is backed by Israeli venture capital (VC) firm Moneta.
How does The Floor work?
The Floor provides software that helps banks to better manage their IT estates, identifying, repurposing or deploying new and updated technologies, whether they are installed internally or offered commercially by an external vendor. Clients include NatWest, HSBC and large international banks with a major presence in the UK such as Santander and SMBC.
Imagine an ‘app store’ of technologies compatible for use by any bank to visualise, update and manage their tech infrastructure to drive continuous innovation across the organisation. As banks increasingly shift to more digital operations and services, The Floor aims to set an industry standard that will empower the bank of the future to keep track of the masses of technology providers they use to easily and quickly use them to their best potential.
Who was it founded by?
In 2016, by Avi Cohen, Moises Cohen and Gil Devora.
Where is it based, where are its offices and where is it operational?
It is based in Tel Aviv with offices there and in Hong Kong. It is operational in the EU and APAC. The tech is done in Tel Aviv.
Avi Cohen, co-founder The Floor:
Rationale for the company:
“We believe technology and innovation are huge catalysts shaping the bank of the future, and The Floor sits exactly at the intersection of those who develop such capabilities and banks that need them.”
How important is it for The Floor to have links to the UK?
“The Floor works closely with big players in the UK market, which is highly significant as it’s one of the world’s top financial hubs with representation by all major international banks. It’s also a great landing pad for the rest of Europe.”
Why is the UK an attractive market for Israeli fintech?
“Predominantly it represents a major business destination – for us especially, the UK banking sector represents the closest major market opportunity within a 5-hour flight. In addition, the UK human talent is becoming more relevant for Israeli companies in need of employees with a mixed understanding of banking/tech, which is not so easy to find in Israel. Additionally, we see the UK tech scene progressing and excelling, producing interesting fintech ventures that can introduce partnership opportunities with Israeli companies.”
How has the pandemic affected The Floor and fintech in general?
“Before the pandemic, as an Israeli company working globally, we were frequently flying to meet in-person with our clients and they were often coming to Israel. This has changed to a new norm and human interaction is much more difficult. Overall, we saw a lot of attention and accelerated interest in our technology as banks needed to speed up their digital transformation processes in order to offer their customers alternatives to in-person services given Covid-19. In general, the pandemic has highlighted fintech’s value in regard to enabling quick shifts to digital loans, digital banking etc, as customers required more online approaches to banking services. We’ve seen the pandemic accelerate a digital transformation that was due to occur in 10 years into the course of one year.”
Will the crisis signal an even greater leap towards fintech?
“I believe it will since the way we do our banking is changing rapidly and, just like other industries, consumers have more options today to invest, take a loan or manage day-to-day financing. More options mean fintech consolidations/M&A [mergers and acquisitions] and partnerships between big tech companies and financial services institutions as we see a lot now (for example Citi/Google).”
What can the UK learn from Israel in terms of fintech and vice versa?
“Although Israel is not a hub for major financial capital, we definitely see Israeli ventures reinventing the financial industry even though most times the founders don’t come from the financial sector. I think this is largely due to the out-of-the-box thinking and Israeli ‘chutzpah’ entrepreneurs from the country bring to the table! Alternatively, the UK is phenomenal in building big brands and leading early adoption to fintech solutions, which is something Israelis can learn from.”
Has Covid-19 highlighted the need for fintech more than ever?
“I think so; people now see the value in having real-time, immediate access to financial services and banks are reacting to the needs emerging from customers. In today’s digital world where everything is instant and
transparent, it was natural that Fintech will be a force in shifting more people to adopt various Fintech solutions. Cash is a good example of how shifting away from physical money (for obvious reasons) resulted in a
sharp increase in the use of digital money apps. E-commerce is another great example.”
Where do you see the great opportunities within fintech going forward?
“If 2020 provided anything it’s perspective. We definitely see banks looking more at sustainable fintech, not only to bring innovation but also to improve the environmental impact banks have in this regard, we see Fintechs helping banks lower their carbon footprint, invest in sustainable portfolios etc. Also I think we will be seeing a wider trend of Fintech anywhere where more non-bank players will attempt to offer their clients new financial products and capabilities – this will only increase the competition and create new business models.
Where do you see the great opportunities for fintech links between the UK and Israel going forward?
“Scale and collaborations are the strongest ones in my view. There are a lot of complementaries where Israeli companies can benefit from the UK and vice versa in the intersection of cyber/fintech/AI.”
Railsbank is the leading global Banking as a Service (BaaS) platform, headquartered in the UK, backed by leading Israeli VC company Moneta. It’s also backed by Tim Levene, founder of Augmentum Capital and the son of Lord Levene (ex-chair of Lloyds of London). It enables banks, businesses and brands to define the future of consumer and small and medium-sized enterprises (SME) finance.
It allows marketers, product managers, developers, CEOs and founders to take their financial product vision and rapidly prototype, launch and scale using its open finance platform, operations, regulatory licensing and rich set of APIs (application programming interface – what allows programmes and systems to talk to each other). It employs more than 200 people across three continents.
How does it work?
Railsbank’s super simple APIs are the building blocks customers can use to build pretty much any financial use case they can imagine, freeing up Railsbank customers to focus on delivering delightful finance experiences to consumers and businesses.
Who was it founded by and why?
It was founded by serial entrepreneurs and fintech veterans Nigel Verdon and Clive Mitchell in 2016. They strongly believe financial services are a human right and not a privilege.
Where is it based?
It is headquartered in London with offices across three continents, including in Singapore, Lithuania, the Philippines, Malaysia, Vietnam, Sri Lanka and the US.
Nigel Verdon, co-founder and CEO, Railsbank
How important is it for Railsbank to have links to Israel, and investment/recognition from Israel?
“Israel is a world leader in investing, founding and scaling tech companies born out of a pioneering can-do attitude. The network of fabulous people is well connected globally and super-helpful once you are introduced.”
“Tim Levene was with Railsbank from the beginning, along with Jon Koplin (former head of Google Wallet EMEA and now managing director for EMEA and Russia at Cisco Investments and corporate development). They believed in the fintech infrastructure vision we laid out before them as they could see immediate benefit to other investments they had made and the wider fintech market.
“We chose Moneta to lead our Series A round after Clive Mitchell, Railsbank co-founder, and I had turned down other investors’ term sheets who were not aligned with us personally. We were impressed with the integrity, respectfulness and driving ambition of Meirav Har Noy and Adoram Gaash.”
How has the pandemic affected Railsbank and fintech in general?
“The pandemic has brought a sharper focus on everything fintech. It is the fintech companies that moved rapidly to help those in need at the start of the crisis, when the quick distribution of money was required.
Take the initiative LightningAid as an example. Railsbank’s unique ability to innovate at speed was highlighted with the launch and implementation of LightningAid.org (helping people and businesses survive financially through the pandemic), which went from the idea to the Apple app store in just eight days.”
Where do you see the great opportunities within fintech going forward?
“Fintech has come of age. It is not a question of it being a subdivision of the financial services industry, but the driving force behind the industry, one that is leading with innovative products consumers are demanding. Covid-19 may have brought this into the spotlight, but it has been an ongoing trend for some years now.
“Today’s financial consumer is savvy and aware that they can have more control over their finances. They look to the fintechs to provide them with a sense of freedom and flexibility with their money, something the traditional banking industry cannot provide. Fintechs are powering global financial inclusivity and this is set to continue for many years to come.”
Tim Levene, CEO, Augmentum VC, original Railsbank angel investor:
“The opportunity for fintech is enormous. The UK has become the centre of gravity globally due to its financial services heritage and forward-looking approach. Nevertheless, Israel will play an increasingly important role as it leverages its extraordinary expertise developed over the past 20 years in tech, in particular the areas of fraud, data analytics and cyber. All of those facets are integral to the future of financial services, and collaboration between the UK and Israeli fintech entrepreneur and investor community will continue to grow over the coming 12 months.
“As a specialist fintech investor and CEO of the UK’s only publicly listed fintech fund, we see a huge number of opportunities on an annual basis. I am lucky to have had the opportunity to back Nigel and his team as they continue to make financial services as accessible as possible.”
Meirav Har Noy, Co-Founder & Managing Partner, Moneta VC
“Moneta Capital is proud to have followed its initial investment into Railsbank and to back the best team globally in Open Finance.
“Railsbank is revolutionising access to banking products allowing any business to become a fintech. Railsbank’s strategic partnership with Visa is powering first-of-its-kind innovation in the US with the launch of credit card as a service. We believe we’ve partnered with a world-class winning team and look forward to a successful 2021.”
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- Down to business
- The Fintech Community of Israel – City TLV
- The City UK of London
- Memorandum of Understanding (MoU)
- Shmuel Ben-Tovim
- Fintech Community of Israel
- Open Banking
- Otni Oron
- UK Israel Tech Hub
- British Embassy Israel
- The Floor
- avi cohen
- Moises Cohen
- Gil Devora
- tel aviv
- Hong Kong
- Banking as a Service (BaaS)
- Tim Levene
- Augmentum Capital
- Lord Levene
- Lloyds Banking Group
- Nigel Verdon
- Clive Mitchell
- the Philippines
- sri lanka
- the US
By Joe Millis