Israel Japan | Business Guide | 2023

F intech, or financial technology, has revolutionized theway people and businesses deal with their finances and their financial transactions. In recent years, Israel has emerged as one of the leading countries in the world for fintech innovation. From digital banking apps to cryptocurrency trading platforms, from payments systems to investment information, from lending to insurance, the Israeli fintech industry is at the forefront of the global financial revolution. Israel has become the hotbed for fintech innovation thanks to its highly educated population, strong venture capital ecosystem, and an excellent track record in related technologies, such as cyber security, data mining and artificial intelligence. The industry has seen an influx of venture capital funding, leading to the creation of a vibrant start-up culture and a flourishing economy. There are currently over 700 active fintech companies in Israel, in addition to global financial institutions that run R&D operations in Israel, such as Citi, Barclays, HSBC, JPMorgan, Sompo andMasterCard. The local venture capital industry includes several VCs specializing in fintech such as Moneta, Viola Fintech, Team 8 Fintech and FinTLV. Payoneer, Next, eToro, Melio, Amdocs, Pagaya, Nice, Traiana, BlueVine Lemonade and Tipalti are among the many unicorns that have emerged in recent years. With such a promising ecosystem, one would assume that Israeli consumers have already actively adopted financial innovation in their day-to-day lives. Surprisingly, this is not the case. The main reasons are a divided financial regulatory system and a conservative approach by some regulators, who prefer, in many cases, the stability of the legacy financial system over free-for-all competition. Nevertheless, some significant steps in the right direction have been taken in recent years, including open banking, the introduction of advanced payment systems, and the regulation of financial information services, based on the European Directive PSD 2 . The Israel Fintech Center is themain hub of the industry. As anNGO founded 10 years ago, it is the home of all the various stakeholders - fintech companies, financial institutions, regulators, investors, consultants, academia, and trade associations. It has developed an extensive network of relations with global fintech hubs, including The Fintech Association of Japan. Several Israeli fintech companies won first prizes in the Tokyo Financial Award competitions. Since November 2021 , the Israel Fintech Center is also the administrator of Fintech.IL Innovation Community, a joint venture of several governmental agencies and financial regulators - the Bank of Israel, Israel Securities Authority, the Ministries of Finance and of Economy & Industry, the Innovation Authority and Digital Israel Initiative. Themain objectives of Fintech.IL is to promote innovation in financial and public sectors in Israel and to assist relevant start-ups. Israeli fintech in fine fettle From digital banking apps to cryptocurrency trading platforms, from payments systems to investment information, from lending to insurance, the Israeli fintech industry is at the forefront of the global financial revolution | Shmuel Ben-Tovim Shmuel Ben-Tovim is the President of Israel Fintech Center: www.fintech-israel.org Israel has become the hotbed for fintech innovation thanks to its highly educated population, strong venture capital ecosystem, and an excellent track record in related technologies, such as cyber security, data mining and artificial intelligence Israel-Japan > Business Guide > 2023 50 > Financial Technologies > Sector Review