Record-Breaking Year in Israel’s FinTech Sector

Israel’s FinTech industry has seen record performance in 2019 as it continues to confirm itself as the global capital of innovation, according to a new report by the Start-Up Nation Central.

The 2019 interactive in-depth report explores the latest performance indicators of Israel’s FinTech ecosystem. It also examines the effects of global trends on this success story, particularly the potential repercussions of the COVID-19 pandemic.

The world declared a state of emergency and is quarantining its population. Due to strict gathering restrictions, stores are forced to close and employees work from home, where applicable. Although the necess

Key highlights of Israel’s FinTech industry

Here are some key highlights from the 2019 report:

  • Equity investment more than doubled to $1.8billion
  • 6 mega-rounds of over $100 million in investments in a single year
  • Average deal size up 33% from 2018 to $10 million – 18% higher than North America
  • Foreign investment now totals 69% of total investment, up from 53% in 2018. 
  • 529 active FinTech companies, up from 288 in 2014
  • Revenue more than doubled for 177 Israeli FinTechs between 2014 and 2018.
Source: Start-Up Nation Central 2020 Israel FinTech Report.

Also, Israel is home to 40+ multinational financial services companies that either have R&D centers (41%), start-up collaboration like hubs, accelerators or scouting (36%) as well as innovation labs (23%). 

These indicators demonstrate the strength and maturity of Israel’s FinTech sector that has now confirmed its position as a global leader in technology innovation. Record foreign investment, particularly from North America and Europe, also points to the world recognizing the strategic value of the sector.

Supporting the future of financial advice

In recent years, traditional financial institutions have faced intense competition from both digital newcomers and large tech companies offering financial services (e.g. Amazon, Facebook, and Google). With their dominant position under threat, incumbents require new technologies in order to stay competitive

At Axell, we strongly believe this represents a significant opportunity for global incumbents to partner with Israel’s FinTech ecosystem, which is set-up to quickly pivot to new opportunities. 

The FinTech sector recognises the financial services industry has been shifting to a partnership model and has shifted its focus to servicing established financial institutions. As the Start-Up Nation Central report highlights, 88% of the Israel-based FinTechs have B2B and B2B2C value propositions designed to be leveraged by larger players. 

Finally, the sector offers diversified technologies and solutions – from asset management to payments, SMB lending, anti-fraud, and more. This allows collaboration across the value chain to provide incumbents with strategic advantages and ensure capabilities in preparation for the future. 

Looking to the future, we believe the COVID-19 pandemic is expected to further increase demand for Israeli B2B solutions by financial incumbents as digital solutions become increasingly essential. 

Why Israel?

After heading up global insurance businesses across Europe, I returned to my home of Tel Aviv, Israel. The experience of working across the world gave me a deep appreciation for Israel’s innovation culture that has continued to thrive in recent years. Being at the forefront of the latest technology and helping connect people with this capability is my passion. It’s why I started Axell.

At Axell, we work exclusively with the financial services industry and build strategic partnerships between incumbents and FinTech start-ups.

We believe the key to successful partnerships in this network is leveraging innovation through the expertise of local advisors like Axell, who can align the objectives and priorities of both incumbents and FinTechs.

This collaboration creates accelerated growth opportunities for both our corporate clients, representing them on the ground here and for our technology partners.

We would love to hear how Axell can support your next project. Please leave us your details to request a meeting.

Yours truly – Moshe Tamir

Founder & CEO | Follow us on LinkedIn

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