group the phoenix andIsracard are announcing today (Mon) that they have signed a memorandum of understanding for cooperation in providing consumer credit to private customers. As part of the expansion of its credit activities, which already today include, among other things, credit for businesses and the field of construction and real estate, the phoenix Under CEO Eyal Ben Simon, launches the consumer credit arm (Solo) for existing and new Phoenix customers.
● Max employees want a larger share of the total sale: shut down the call center
Customers of the insurance company who wish to request credit from the company will undergo an underwriting process by Isracard, which will also provide operational services. Let’s recall that Isracard has positioned the credit sector as one of its main growth engines for the coming years, and for this purpose under CEO Ran Oz (until about a year and a half ago a competitor of Phoenix in his previous position as CEO of Migdal) and chairman Tamar Yas’or upgraded its credit granting systems.
At the same time, the one who will believe in credit marketing is the Phoenix and it will do so through its direct marketing systems, at least in the beginning. The financing for the activity will be provided by the two companies in the ratio determined between them, for a period of five years with an option for another five years. Globes has learned that it is Phoenix that will provide the bulk of the credit, and it is also the one that will receive most of the revenue.
The move means that Phoenix actually shortens its path to providing consumer credit. The process of setting up a company to provide consumer credit takes about two to three years, and through the cooperation, which is subject to the approval of the competition authority, and the signing of a final agreement between the parties, the period of time until the first loan is granted is several months. That is, the move allows it to receive all the benefits of a company that provides consumer credit without paying a significant price as Clal Insurance is expected to pay for the purchase of the Max credit card company – about NIS 1.6 billion in cash and shares.
Ran Oz, CEO of Israchart Group / Photo: Tami Bar Shai
In the coming weeks, the purchase deal of the credit card company by Clal Insurance should be decided. On Wednesday of this week, a vote will be held among the shareholders regarding the appointment of directors in general, when Alrov Real Estate controlled by Alfred Akirov, which opposes the Clal-Max deal, will try to introduce two candidates to the board of directors and thus thwart the deal.
In the coming days, the new Finance Minister, Bezalel Smotrich, is also scheduled to announce his decision on whether to separate the credit card company Kael from the Discount Group (which controls 72% of it). If he does so, Smotrich will receive the recommendation of the special committee established to examine the issue, which recommended the separation of the entities. This is a process that, if implemented, will take about 3-4 years.
The collaboration between Phoenix andIsracard Designed to provide attractive consumer credit that will compete with the banks, so that the interest rates will probably be closer to those offered by the banks in loans for any purpose than to the loans of the non-bank entities that have already reached double-digit interest rates after the recent interest rate increases (today the governor of the Bank of Israel will announce another increase, apparently by 0.5%).
Phoenix is well acquainted with its customers due to the large amount of information it has about them, whether about private customers or about businesses, information that includes, among other things, commercial conditions, and it meets them when renewing car insurance, for example, home insurance or purchasing travel insurance abroad, events in which It can offer them credit. In addition, it will benefit from the open banking reform, which will allow it to obtain information on additional customers, if they give their approval. Mishrachert and Phoenix stated that the cooperation increases competition in the field of consumer credit and will bring great value to the consumer by leveraging the strengths of both entities .
For Phoenix, the move is part of the announcement of its intentions to grow in the credit channel, as Ben Simon also pointed out at the Globes business conference last October, and as part of the company’s strategic plan. Therefore, the launch of the activity to provide consumer credit led by Ilon Dahabas as CEO of the activity is added to the existing credit activity in the group and will be handled under the “Phoenix Credit” brand.
As mentioned, Isracard has defined the consumer credit area as a strategic focus and a key growth engine. This cooperation is another step in completing the company’s solution package. Isracard operates both organically and independently as well as through collaborations with leading entities in order to realize the potential inherent in the execution of the strategy.
Ben Simon said with the signing of the memorandum of understanding that “the field of retail and consumer credit is a natural development for the group’s activity in the field of financing, which includes, among other things, corporate financing, business credit and financing and guarantee activities in the real estate industry. The establishment of a consumer credit arm and the memorandum of understanding signed today with Isracharet to provide Solo credit for households are the result of a professional and thorough process born out of the group’s strategic plan, which aims to provide an umbrella of credit solutions.”
Oz noted that “advanced credit solutions for our customers are in the strategic focus and we are working in diverse ways in order to implement this in the field. We are already seeing the acceleration in the rate of growth of the credit portfolio in recent quarters.”