in India

Fintech in India - A global growth story
58
Israel
Israel uses indigenous technology skills and a strong
network of foreign investors, providing favourable
environment to foster fintech innovations.
Israel has emerged as a strong fintech ecosystem, with
more than 500 active fintech start-ups registered in 2015.
This is primarily driven by their legacy of innovation and
technology. This has been coupled with strong overseas
investor interest, presence of more than fourteen global
innovation centres, three global fintech hubs, an organized
financial sector and steady policy support. Tel Aviv has
launched multiple international events to provide a global
platform to Israeli start-ups, which are presided by celebrity
Israeli serial entrepreneurs to keep engaging the right
audience in the world forum.
Assessment of fintech environment in the Israel
Entrepreneurial & Innovative mindset
Government incentives
Technology readiness
Regulatory support
Business environment
Source: Internal KPMG Analysis, 2016
Key growth levers
Funding
Nascent Emerging Mature
Tech readiness and focus on cybersecurity
Technical skilled workforce combined with a high
concentration of tech firms are the biggest strengths
of Israel. The country has other critical demographic
ingredients - extremely tech savvy and research
oriented populace – a critical need for finding quick
acceptance of highest quality products in the local
market. Example:
• Israel has a large number of active tech start-ups, with
about 8500 in Tel Aviv itself making it the seventh
largest start-up hub globally 162 .
• Israel has witnessed a significant number of locals
returning to the country after gaining global experience
on the Wall Street and in London 163 .
• Hi-tech firms such as Microsoft 164 , Intel 165 and
Amazon 166 have their accelerators in Israel and have
ongoing investment plans.
Emerging strength areas
Global funding
There is considerable commitment shown by the global
investor community. Example:
• Exponential growth in the amount of capital raised by
fintech companies between 2009 and 2014, with this
number set to grow higher at the end of 2016 167 .
• In 2015, 373 Israeli start-ups raised USD 3.58 168 billion,
with a 69 per cent year-on-year (YoY) increase.
• In 2015, Israeli fintech raised 12 per cent of all money
invested in the country 169 .
Business environment
Israel has a well-organized financial sector, which is
instrumental in making steady investments to keep their
systems and offerings secure, usable and cutting edge.
Example:
• Major global financial institutions have set up innovation
labs, such as Barclays Accelerator ISP fintech Hub and
Citigroup’s accelerator.
• Local incubators by domestic players such as Bank
Leumi are also laying big bets on their domestic fintech
talent.
• The Israeli Defense Forces has helped in building
abundant local tech talent through R&D centers 172 .
Government incentives
Israel’s Ministry of Finance is keen on developing a
regulatory structure for the fintech sector and is currently
considering various regulatory models from the U.K.,
Ireland, the U.S. and Australia.
Also, to further incentivize the fund and achieve talent
inflows, short-term premiums and tax break policies have
been proposed. Example:
• Israel start-up visa was introduced in October 2015,
granting permission to entrepreneurs and tech workers
to develop projects in Tel Aviv for up to five years 173 .
• International events are regularly hosted in the region,
such as Fintech Tel Aviv 2014 174 , Digital-Life-Design 175 ,
Go 4 Israel 176 and Mix Israel Innovation International 177 .
• The Chief Scientist and Israel Innovation Authority have
provided grants to support programmes 178 .
• Tax breaks to venture capital backed accelerators. The
Angel Act (2011) offers tax incentives to investors
invest early-stage capital in firms 179 .
• Tax benefits to investors funding start-ups which are
not three years old 180 .
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