Incoming Supervisor of Banks Hedva Ber today presented to the "Calcalist" conference in Tel Aviv her ideas on the expected changes in the banking and financial system in the coming years and the Bank of Israel Banking Supervision Department's plan for promoting competition in the banking sector.
Ber presented a number of initiatives designed to bolster competition in the households and small business segments:
- A credit database available for use to the entire financial system.
- Separation of the credit card companies from the banks with a retail credit market share of over 20%. This means that the two largest banks will have to sell their credit card companies, and will be barred from credit card operation and clearing; they will be able, however, to continue issuing credit cards. In addition, the Bank of Israel will advocate that the companies be allowed to issue bonds to finance their business, and the credit card companies will also be supervised by the Bank of Israel Banking Supervision Department.
- The Bank of Israel will support the entry of institutional and non-banking entities into the retail and small businesses credit segment through the purchase of loan portfolios from the credit card companies and the banks.
- The banks will be allowed to distribute insurance products.
- The Bank of Israel will define deposit insurance, which will reduce the cost to the economy in the event of a bank encountering difficulties or failing, and will help strengthen the smaller banks.
Ber said, "It can be expected that within a few years, the banking and financial system will have a different look - more technological, more competitive - in spheres affecting households and small businesses, particularly in credit, payments, and additional financial products. Furthermore, it is likely that the borders between institutional concerns, banks, and the new players entering the system will become blurred.
"These changes are already taking place now around the world as a result of technological changes making it easier to enter the financial sectors and creating a more competitive environment. Regulation for banks, which is different from regulation for non-banking entities, has increased in recent years. The Bank of Israel and its Banking Supervision Department will lead and support these changes, with our overall goal being protection of the consumer and advancing the good of the consumer and the economy."
Ber added, "Maintaining stability does not prevent an increase in competition. We believe that more changes can be made in competition without detracting from the system's stability, and the Bank of Israel and its Banking Supervision Department will do so, including the promotion of structural changes."
Published by Globes [online], Israel business news - www.globes-online.com - on September 1, 2015
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