Israel might be the Startup Nation, but the growth of the tech industry is driven mainly by international demand. Moreover, this export-oriented industry depends almost entirely on the ability to fly, create meaningful business relationships, and close deals. The closed sky and limited intercontinental transit bring with it new challenges, but also opportunities. Instead of being primarily facing outwards, innovators can thrive, or at least grow inside of Israel.
Many technology companies have carried out rapid and successful operations of converting their products to uses that meet the challenges of the period and are experiencing real accelerated growth. But for hundreds, if not thousands of companies, especially those in the early stages and without representation abroad, this period poses a significant challenge that directly impairs growth and revenue forecasts.
On the other end of the spectrum, that of the big organizations, we see that the need for technologies has never been higher, and much of the current demand is based on facing challenges that require immediate solutions. Before the pandemic corporations would sometimes explore shiny state-of-the-art tech just because they could. Now, innovation is much more results oriented and demand driven. It is focused on tackling current challenges.
The technological revolution was already in full swing before COVID-19, but has since been accelerated in many verticals. This means both the benefits and challenges we faced before have been amplified. From remote work to a tremendous rise in ecommerce activity, to, of course, frontline workers leading the charge against the virus—Israel needs market-ready solutions that can be implemented quickly.
The insurance industry has experienced the winds of change as of late. The growing utilisation of multi-cloud solutions have had a profound impact on business models, with established stalwarts such as Harel Insurance becoming one of the most recent multi-cloud adopters. This cloud-based adoption is reinvigorating the company model of Israel’s largest insurance group by recognising the value of staying dynamic and relevant in such a changing landscape.
Striking a unique partnership with Microsoft’s Azure cloud platform, Harel has already begun by refined actuarial calculations through cloud servers and the use of advanced technologies. Not only will this help alleviate workloads for insurance companies, but customers in Israel will be able receive financial models that correctly reflect business expectancy.
The latest development has seen the company announce the introduction of IFRS 17, the new accounting standard for calculating insurance contracts using cloud technology. This could well turn into an industry milestone revolutionising the way risk is calculated, and it’s ordinary Israelis reaping the benefits first.
This combination of a high level of demand for technological solutions, alongside companies and organisations that are naturally now more dependent on the domestic market, may be a rare opportunity to accelerate open innovation processes here, at home. This is not a substitute for the international market, but can definitely be another step in the life trajectory of Israeli startups before they enter the global markets.
If we know how to take advantage of this opportunity, we will come out swinging widely in many directions. Israeli corporations will have the first access to work with some of the most advanced technologies in the world before they are exported abroad. Israeli startups, whose business development capacity is limited in the current situation, will be able to continue developing and validating their products and services. The local population will also benefit from improved infrastructure and advanced services in a variety of sectors.
It is possible that the COVID-19 crisis created an opportunity to initiate and accelerate digitization and innovation in Israeli corporations, under conditions that have not yet existed. Although many Israeli corporations already engage in open innovation in one form or another, most players in traditional industries do not actively and effectively promote digitization and innovation as an integral part of their business. It may be that now out of necessity of the new reality, many business collaborations between startups, local corporations, and government bodies will contribute to the technology industry, as well as to the state and the economy. We all stand to benefit from the assimilation of these technologies.