Eyal Gafni, who recently became CEO of digital bank One Zero, is trying to take a bite out of the market share of Israel's veteran banks. He told "Globes" correspondent Hezi Sternlicht at the "Going Long on Israel" investment conference about the new bank's performance. "One in every three new accounts opened up at a bank today is with us."
Gafni says that the buds of competition are also being expressed by investors. "Until a year or two ago, 90% of securities portfolios were held with traditional banks. Today, that's starting to change. Today, about 30% of new portfolios are opened outside of (traditional) banks. We asked ourselves why people continue to invest through traditional banks, when they know that it's abnormally expensive, with crazy fees and foreign exchange rates. We conducted tests to understand the phenomenon.
"In the end, there are a few things that the customer examines. Where is it convenient and available, and is the place secure, and for most customers the answer to the question of trust is the banks. On the other hand, prices are better at investment houses. We asked ourselves what would happen if we connected all these worlds together, what would happen if the customer could receive both the availability of their money, a convenient and simple system, the security of a bank, and super attractive prices. We decided to offer basically everyone who trades through One Zero the option to do so without paying all the obsolete fees."
When asked whether the digital bank's customers are mainly young, Gafni replied: "The age range is mostly 35-55, so not necessarily young. We see that the vast majority of customers are men."
When asked about Israeli banks' huge profits, which amount to tens of billions of shekels, and the need to improve competition in the industry, Gafni replied, "We see the huge profits and the gap that I always notice is that probably everyone in the audience here thinks that they don't pay anything to their bank. And then you have to ask, who are all these people who pay the banks all the money?"
He continued, "In the last year or two, about 9% of deposits that have been added to the banking system are with us." He further explained, "We offer customers to close money in the current account in a deposit, and receive a 4% return on it, for example, even if it means paying a higher interest rate."
Current account abuse can be easily solved
"Current account abuse" – this is how Gafni describes the current account abuse situation in which it is convenient for banks to keep the public's money in checking accounts with zero return. "The story of current account abuse can be easily solved. Without being a demagogue, I will say that in the end it is a story of awareness and alternatives. All that is required is to inform customers of their options.
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"We constantly inform customers when they have an excess balance in their current account, when it is higher than a certain amount, and we also inform them of what happens in the opposite direction, before they go into an overdraft."
Gafni was asked his opinion on the open banking reform. "In my opinion, this is magic. It means that each of us, as a bank customer, is responsible for our information and can take it with us in our pocket and give access to this information to anyone we want. So really, in the banking system, there is only a few percent adopting open banking. But at One Zero, it's really not like that.
"Over 20% of customers connect credit cards and other bank accounts to One Zero and see all their money in one place. This way, they get insights that tell them when it's a good idea to transfer money and where. The Bank of Israel also needs to make efforts so that they understand that this gives customers a lot of power."
The conference is held in collaboration with Clal Insurance and is sponsored by One Zero bank and Ratio Energies.
Published by Globes, Israel business news – en.globes.co.il – on March 24, 2025.
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