Everyone who grew up in an Israeli kindergarten knows the swing song by Haim Nachman Bialik; “Ned Ned, go up go up…who’s up, who’s down…just me and you”. And who among us does not remember the feelings of pleasure up there, on the swing.
A mature look at the memories from the playground will show us that most of the power and control is actually in the hands of the child who is “downstairs”. And as in the amusement park, also in the financial field, being down or behind does not necessarily mean losing or retreating. Sometimes, like in the garden; Down is the real “up”.
One of the questions that preoccupied fintech world commentators in recent years was “whose hand will be on top; the banks or the fintech companies”. Who will be on top and who will be down?
It is no secret that the banks are in a period of rethinking. This is a time when the game board is changing intensely. New business models are created, as well as new products and partnerships. The feeling is that we are in a state of incubation that will produce, when it matures, a new and different game board from the one we are familiar with. The place of the banks on this new board is not yet clear.
One of the dangers of the banks in this situation is the danger of “losing the brand” or “losing the storefront”; While banks are closing branches in a movement of convergence, new companies and advanced services are flooding the area that may take the banks’ place at the forefront.
The question that was frequently asked was: Are the banks going to become BACK OFFICE companies, offering financing to the public through fintech companies?
But it is possible that the question or the tone in which it is formulated is no longer suitable. It is possible that the transition to the world of open banking creates a different environment (Ecosystem), where standing behind when new partners are at the front, is not problematic for banks, but promotes their place on the new game board.
Just such an example presents National Bank Through the subsidiary company “Fintaka” which he recently founded. The role of the company founded by CEO Hanan Friedman, together with Haim Shkolnik (head of Leumi’s technology division) and with Shay Rosenberg (CEO of Fintech) is to form a bridge that connects fintech companies in Israel (and around the world) to the bank, thus creating for the bank dozens (and maybe hundreds) of dynamic and energetic storefronts.
Fintec was built as a small, fast and innovative company working on Amazon’s cloud infrastructure (AWS). Its purpose is to expose some of the bank’s products to fintech companies and developers, to make the bank’s hundreds of API’S accessible to these companies, and to closely assist the developer companies – all this to create an active and dynamic ecosystem of fintech services around the bank.
Among the API’S that are opened to fintech developers can be found cyber protection services, foreign currency, loans and the possibility of opening bank accounts at Leumi. In this way, Leumi becomes a provider of BaaS solutions for other entities in the economy.
Among the options that will open up to the developers are also shortcuts that will position Leumi at the center of the game board, such as the possibility to draw information (in accordance with the open banking regulation) also from other banks in Israel. In addition, Fintec will allow developers who will nest in the new environment to also connect to third-party bodies in the world such as the NASDAQ.
Contrary to the harmful instinct of most banks that try to defend themselves from the world of open banking through various tactics, Leumi goes its own way; the opposite way. In doing so, it becomes the first bank in Israel that succeeds in exiting the world of closed environments to the world of open platforms and ecosystems that characterize our times.
There is a new move of networking here. Instead of the outdated physical network system – the concrete and glass branches, the bank sows the new game board with digital branches; Fintech companies. Instead of the static physical branch that must be promoted through huge advertisements, the bank individualizes its storefront in favor of dozens (and perhaps hundreds in the future) of dynamic business entities with a desire for growth that will help it promote its business.
The success of the move will bring a wave of innovative fintech services to bank customers, but will also position Leumi as the central entity in the Israeli financial market.
It turns out that Bialik’s poem about the amusement park swing where you can be “up” or “down” misses the possibility of the two swingers being “together”.