The meteoric rise of Fintch | By Shutterstock
The meteoric rise of Fintch | By Shutterstock

How Did Israel Become a Hub for Fintech Startups?

A recent report found there are now around 600 different fintech companies operating in Israel. What caused this major leap?
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The Israeli fintech market is on the rise. In a recent report, it was found that there are now around 600 different fintech companies operating in Israel. The industry’s growth has been astronomical, with startups and established players alike moving into new markets at a breakneck pace.

For those of you who are not familiar with the term – Fintech is a portmanteau of the words “finance” and “technology,” which has led to an endless array of applications. From mobile banking and insurance to cryptocurrency or investment apps, Fintech provides consumers with services in multiple ways while also serving businesses’ needs for automation across all aspects- from payments processing on credit cards to advanced Robo advisors who manage portfolios based on age brackets.

How has Israel become such a hub for Fintech Startups?

The Israeli Fintech industry has raised a combined record of 2.3 billion dollars in only the first half of 2021, with payment solutions being the sector’s hottest ticket. Over the last two years, 70% of Israeli FinTech funding was funneled into three major subsectors: Payments, Anti-fraud and Insurtech. This created leeway for a new generation of digital transactions changing how SMB’s to Enterprises are doing business.

“While electronic payments are controlled by a consortium of all the banks in Israel which made it widely adopted by almost 100% of the market, other Fintech areas are emerging and growing rapidly. With enterprises not having to invest in payment optimization, budgets were redirected to other Fintech areas that can bring high value to their business.

A good example is hyper-automation of Accounts Payable, Accounts received, and RFP to Payment processes. Israeli enterprises lead the world with the adoption of AI and RPA technologies that automates these processes. The success of hyper-automation technologies not only created a huge competitive advantage to global Israeli enterprises but also paved the way for many Fintech companies to grow through the early adoption of innovative Fintech startups with large corporations in the market. It resulted in the Israeli market is an incubator for Fintech companies and their anchor for global expansion” told me Eyal Rosenberg, Co-Founder & CEO of Nipendo, an Israeli Fintech company offering a Cloud-based RPA (Robotic Process Automation) platform for RFP-to-Payment process automation, augmented with AI and Deep Learning technologies adopted by over 40 of the largest global corporations in the Israeli market.

Eyal Rosenberg – CEO and co-founder of Nipendo | By Nipendo

Start-Up Nation FinTech Analyst Nicole Krieger added that: “2021 has been encouraging for the Israeli FinTech sector so far, with a record number of large late-stage funding rounds, notable exits, and emerging early-stage companies. COVID-19 drivers aside, Israeli FinTech companies have grown rapidly and globally, building commercial partnerships and contributing significant technology to payments and enterprises.

Tech innovation significantly upgraded legacy financial services processes. The sector now stands poised for a new era; we see a digital age emerging and are watching digital currency evolution enter a new digital age; it seems the stage could be set for subsequent FinTech evolution, such as the adoption of digital currencies.”

Fintech On a Global Scale

When we look at FinTech on a global scale, we see the vast disruption FinTech startups are making. Consumers and companies alike are looking for any way to save money and increase productivity, which means we will continue to see the rise of these new financial technologies throughout the upcoming years.

“What we have seen in recent years is that those next-gen FinTech businesses are taking over the market replacing outdated legacy enterprise solutions in a head-spinning rate, which has only intensified in recent months courtesy of Covid,” said Dovi Frances, Founding Partner of Group 11, one of the leading FinTech Venture Capitalists in the world.

meet the tech influencers who take over social media | By Shutterstock
What was the leading cause Fintech has taken such an enormous leap? | By Shutterstock

When I asked him what the leading causes Fintech has taken such an enormous leap, Dovi said: “The reasons why next-gen FinTech solutions are being adopted faster than ever nowadays, are: First is the 2008 global financial crisis, which put financial institutions on the defense vs. offense (I am sure many of you can agree when thinking about how much time you still deal with compliance and risk), the second reason is the penetration of affordable, connected and ubiquitous smartphones that are now being vastly used by over 85% of the people in the US and about 70% of the global population and the third reason is a generational shift where Millennials (Born 1980) and Gen Z’s (Born 1997), who are essentially digital-natives, have taken over the workforce.”

Where is the FinTech industry heading?

So where is the FinTech industry heading? “Many established financial services firms will basically be obliterated over the coming few years as they will be replaced by next-gen FinTech businesses taking over their market share one bite at a time”, said Dovi.


Omri Hurwitz is a marketing and media expert who advises leading High-Tech companies. In addition, He writes for several Media channels and has a podcast that covers the subjects of technology, entrepreneurship, and more.

Forbes Israel Contributors are independent writers that were individually picked by Forbes staff. The writers are experts in their field and they provide professional commentary and analysis of current events. The content is unsponsored.

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