First Digital Launches; Set To Disrupt Israeli Banking Business

First Digital Bank, which is the first digital Israeli bank to launch since 1978, has begun trial operations as of Sunday (March 14), Reuters reported. The bank will be open to the public later this year.

The bank, approved last year by the Israeli banking regulator and founded by Amnon Shashua, co-founder of Intel’s autonomous car business, Mobileye, will use artificial intelligence (AI) and other technology to help meet customer needs. Reuters reported that Shashua spent $60 million on the project and intends to raise other funds as well.

First Digital Bank will have no branches and will instead focus on retail services, extending credit to households and accepting deposits. The opening of accounts will be handled online, Reuters reported.

The bank is currently offering its services to a closed customer group, according to Reuters. It plans to offer its services to 1,000 new customers in the third quarter before opening to the general public near the end of the year.

In-person bank branches are an aspect of life that could be teetering in the balance because of the pandemic. They were already in decline before the pandemic hit, with increasing numbers of consumers looking into managing their financial affairs through digital methods, including mobile apps and websites. There were already fully digital banks in existence.

But the pandemic shifted many industries to the digital realm. Citizens Bank announced it would be shuttering 40 of its branch banking locations in stores, for example, and U.S. Bank will be closing a total of around 700 locations by the end of 2021. PNC Bank will also be closing numerous locations, as will Wells Fargo.

The shift has banks reconsidering their entire business model as customers have made it clear that they would rather use digital methods. The reason is partly because of reliability, with the pandemic having made it impossible to access some physical branches, as well as safety as the pandemic made it harder to socialize in person.