Israel is a key fintech opportunity for Australia with a number of fintech companies planning to expand into the market, according to KPMG global co-leader of fintech practice, Ian Pollari.
Just last month, Pollari and the KPMG team led a group of financial services executives from around the world on an 11-day tour of Israel.
The banks and financial services companies came from Australia, New Zealand, the United Kingdom, United States, France, Germany and South Africa.
The tour included a series of meetings between the global banks and Israeli fintech sector and included presentations from the fintechs as well as the Israeli bank – Bank Leumi. There was also a visit to The Floor, a fintech hub like Stone & Chalk of which KPMG is a corporate partner.
The tour included what Pollari described as the largest ever fintech conference, held in Tel Aviv, which KPMG arranged and co-sponsored.
“Israel has emerged as a leader in innovation. It is a well-developed market and the fintech sector alone is now worth $US625 million,” Pollari told AB+F.
The New South Wales Government and Federal agency Austrade have also recognised the importance of Israel as a key market for innovation. In May, the government announced an initiative to take Australian tech startups to Israel on the back of its Landing Pads initiative.
These Landing Plans are intended to stimulate Australian innovation and entrepreneurship and are included in five locations around the world: San Francisco, Shanghai, Berlin, Singapore and Tel Aviv.
Army of technologists
An interesting driver behind the growth of Israeli’s fintech market is its compulsory military service. Under its military plan, men are conscripted to join the army for three years and women for two years.
According to Pollari, young Israelis leave the service well trained in technologies such cybersecurity and artificial intelligence and often start up their own businesses.
“They become highly educated and trained in a number of technologies, creating their own enterprises. This has led to a vibrant fintech market in the country," he said.
While the value of the Australian fintech market is on a par with Israel – Australia stands at around $US656 million, Israeli fintechs are distinguished by their desire to expand and grow their businesses internationally.
“We have found many more fintechs in Israel have been successful in scaling up their businesses and growing in overseas markets. They are really thinking about going global,” he said.
Companies that have achieved international scale include OurCrowd (Founder Jonathan Medved, pictured speaking at the conference), FundBox, MyCheck, Earnix, eToro, Personetics, Thetaray and BioCatch.
According to Pollari, a number of these companies are looking to expand in Australia. One example is Personetics which is working with four of the largest 10 banks globally and recently attracted investment from Santander.
The business uses artificial intelligence, predictive analytics and machine learning to help financial institutions engage with their customers. OurCrowd, an equity crowdfunding platform is another example and already has an office in Sydney.
Two of Australia’s big four banks already have established partnerships in Israel. The Commonwealth Bank of Australia has a memorandum of understanding with the Chief Scientist of Israel to collaborate on technology, including cybersecurity, while National Australia Bank has a strategic alliance with Bank Leumi.
“There is a really good culture and openness in Israeli’s innovation sector. The nature of success is the ability to expand and these companies are well positioned for global growth and country’s like Australia will benefit.”