Dmytro Spilka
Contributor to, TechRadar and TNW.

How Israel’s Burgeoning Fintech Landscape is Set to Change Purchases Forever

Israel’s market resilience in 2024 is a testament to the startup nation’s commitment to innovation throughout the tech sector. With strides being made throughout global fintech and digital currency, it appears that the financial sector will be the latest industry leveled up by Israeli tech. 

The resilience of Israeli technology is clear for all to see. According to Q1 2024 data, Israel’s tech ecosystem grew 8.5% by gaining $1.8 billion in funding. This growth was driven by a rise in average funding round size, which helped to overcome a decrease in the total number of funding rounds within the tech sector. 

With Israel’s high-tech sector now accounting for 20% of the nation’s economic output, according to the Israel Innovation Authority (IIA), growing financial tech is key to bolstering its performance on the world stage. 

High tech also accounts for 53% of Israel’s total exports. It’s for this reason that the startup nation’s global imprint continues to grow as its tech hubs build cutting-edge technology to sustain the rise of open finance and the development of fintech. 

Backed by a government that supports pioneering exploration into central bank digital currencies (CBDCs), Israel is set to play a major role in providing digital transformation for the fintech sector. 

Supporting Next-Generation Fintech

Israeli government policies are laser-focused on driving fintech innovation. With the utilization of tax incentives for startups and R&D grants, it’s unsurprising that the nation has made strides in building a conducive ecosystem for the development of financial technology. 

Such is Israel’s commitment to next-generation fintech that April saw the Bank of Israel launch a sandbox for the private sector to develop “innovative use cases” into a prospective future utility of a central bank digital currency (CBDC). 

As part of a long-running CBDC research program, the sandbox is focused on informing the design and utility of a digital shekel that could help accelerate Israel’s position in the world of fintech. 

Central bank digital currencies are closely related to the world of cryptocurrency and are expected to form the cornerstone of transactions in the age of Web 3.0. The emergence of CBDCs can help nations develop more frictionless and borderless financial infrastructures that facilitate more efficient international trade. 

This points to the prospect of an Israeli CBDC growing the nation’s tech exports while improving the quality of its fintech services. 

The success of the sandbox will help to grow Israel’s already strong position on the world stage. With a strong flow of international exports reaching many different continents in 2024 already, the future appears bright for fintech innovation domestically and internationally. 

Building on the Global Stage

Recent weeks have seen Israeli firms take significant strides on the global stage in offering fintech innovation to world markets. 

In May, Nayax, a self-service retail payment specialist firm from Tel Aviv, announced the acquisition of Brazilian firm VMtecnologia in a deal worth a reported $27 million

VMtecnologia offers autonomous points of sale without the need for human interaction and could open the door to innovations in handling payments for vending machines, laundry terminals, and micro-markets through its unique VMpay private label technology.

The acquisition of VMtecnologia could pave the way for Nayax to become an industry leader in autonomous payments, and help the firm evolve near-field communication (NFC) technology to facilitate mobile payments across many use cases, such as public transportation and a variety of self-service locations. 

July also saw Israeli-Swiss fintech startup Okoora move into Polish markets, helping to grow its presence within Europe. 

Okoora is an AI firm that specializes in global payments, banking solutions, and risk management and stands as a vestige of Israel’s pioneering work in the swiftly evolving world of open finance. 

The firm’s expansion into Poland involves the arrival of sales offices, a marketing team, customer service, and an R&D center to help aid product development. 

Achieving Sustainable Fintech Funding

Using 2023 metrics to form a foundation for Israel’s future as a fintech innovator, it’s important to acknowledge that the $500 million in early-stage fintech funding received by Israeli firms last year falls a little lower than recent annual trends. 

Likewise, the $1.4 billion in total fintech funding has also been lower than global trends. But here, it’s also essential to note that 2023 was a year of unprecedented challenges for Israel, and recent indications of global growth are a key sign of resilience for a startup nation that’s showing its ability to scale at an effective rate. 

In what was expected to be a year of consolidation and recovery, Israeli fintech firms have been making waves in both Europe and South America as payment innovation takes center stage. 

With a special emphasis on the development of a CBDC and its very own digital shekel, the future remains bright for Israel’s role in democratizing the future of open finance.

About the Author
Dmytro is a CEO of Solvid, a creative content creation agency based in London. He's also the founder of Pridicto, a web analytics startup. His work has been featured in various publications, including, TechRadar, Hackernoon, TNW, Huff Post, and ReadWrite.
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