Taking part in a Knesset Science and Technology Committee discussion, Supervisor of Banks Hedva Ber spoke today about the digital revolution sweeping the banking system. According to her figures, 80% of bank customers subscribe to direct banking channels, 50% subscribe to online banking services, and 50% of transactions are conducted outside the bank branches. She stated, "In the coming years, banks will be founded without branches."
Ber continued, "The situation is leading to changes in the bank branches. The number of new branches opened in recent years grew substantially, but in the past three years in the major cities, branches have been closed and proximate branches merged, while the banks have been opening more branches in the outlying areas. A net 56 branches were closed in the past four years, amounting to 4.5% of all branches."
Ber added that digital transactions were 75% cheaper than transactions conducted at teller positions and desks in branches. For example, bank transfers, cash deposits, depositing checks, and cash withdrawals cost NIS 6 when conducted by a bank clerk, compared with NIS 1.50 on a direct channel.
"In my opinion, this trend supports the narrowing of gaps. In the past, it was asserted that only in the big cities were all the bank services provided. Now there is a solution for every location, and at diverse times. I conduct transactions at 10 PM in my living room, including transfers to my daughter. I don't have to go to the branch," Ber explained, adding that the change will also provide a better solution for financial counseling. "We'll see significant better access in real time for customers with smaller investment portfolios," she declared.
"The technology also facilitates more competition and smaller players. Banks with and without branches can offer services and compete with the big banks. We see this around the world, and we'll see more of it in the coming years in Israel, with the founding of completely digital banks without branches, and even players that are not banks," Ber said.
Committee chairman MK Uri Maklev (United Torah Judaism) responded unenthusiastically, saying, "The problem is not branches closing down; it is the reduction of frontal services. There are major population groups - the outlying areas, senior citizens, the handicapped, and others - for whom this revolution is liable to widen the gap." According to Ber, however, those over 50 use the online channel more than the other direct channels, looking for information about their accounts and conducting transactions.
Dalia Resnick from the Ministry of Social Affairs and Social Services, said, however, "Some of the population will not have access to technological processes if they are not trained. There are 160,000 people eligible under the Community Long-Term Care Insurance Law, and I am very worried that they will suffer from the transition. They are already being exploited economically by workers and their families, and I fear that the transition will make it worse."
Published by Globes [online], Israel business news - www.globes-online.com - on June 22, 2016
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