If I ask you to picture a bank, what is the first thing that comes to mind? Probably an office with tellers, computers, and lots of physical cash. But what if I ask you to picture the bank of the the future? This might be a bit trickier.
We both spent the semester studying at NYU’s global campus in Tel Aviv and interning at The Floor, Israel’s premier fintech hub located in the Tel Aviv Stock Exchange. The mission of this organization is to shape the bank of the future by connecting fintech startups with banking institutions.
How exactly does The Floor intend to shape the bank of the future? It partners with 6 of the world’s largest banks– HSBC, Intesa SanPaolo, Santander, RBS, Deutsche, and Accenture– that they see fit to cooperate with Israeli fintech innovators and fintech startups actively seeking mentorship and use cases for their technologies. This business model is completely unique and does not exist elsewhere, which is ultimately what has propelled The Floor to success.
Sternies all know that fintech is a hot topic in places like Silicon Valley and Hong Kong, but Tel Aviv may not cross their minds. But Israel actually has the largest startup concentration and VC investment per capita worldwide. The nation’s strong background in the start-up field is just one of the many reasons that it has been so successful in fintech. Many of the top fintech companies, such as Payoneer, Neema, and OurCrowd, were born in Israel. In addition, Israeli fintech firms raised over $400 million in the first half of 2018.
Israel is far from being one of the financial capitals of the world. Israeli banks Hapoalim and Leumi alone hold about 60% of Israel’s market share, allowing little room for foreign banks to establish valuable footholds in the nation. But this is where The Floor comes into the picture.
Together, Avi Cohen, Gil Devora, and Moises Cohen co-founded The Floor when they realized there are many revolutionary technologies in Israel that go unutilized due to the lack of a global banking presence. We spoke with Moises to understand more about his inspiration for building The Floor. “I was working at Accenture as a senior banker, but something was missing. I wanted to be my own boss,” he said.
Walk around the office and you will immediately appreciate the workplace environment that The Floor fosters. On a typical day, you will see Avi, Gil, and Moises going from bank to bank and startup to startup, consulting with each individually on their current business needs– and, not to mention, checking in with the interns too!
Earlier this year, The Floor opened offices in Hong Kong with the intention of creating a foothold in the APAC market for Israeli innovation. “We see the Asian market as a green field for Israeli fintech innovation. There are about 500 fintech startups operating in Israel, yet only five of them have established a presence in Asia,” said Cohen. With this move, The Floor is looking to bring Israeli fintech to the international stage.
What is the bank of the future and when will we see it in action? Banks must ultimately choose between becoming a utility bank or controlling relationships with end customers. The Floor predicts that by 2040, the world will see an increased presence of deviceless transactions, quantum computing, and virtual banking. By then, physical cash might even be completely extinct.
For now, the future is unknown, but what is certain is the following: global banks have already implemented fintech technologies into their platforms, in part due to the work of organizations like The Floor. Stern students face an exciting time in the history of banking, and have already witnessed so much disruption from fintechs, but this is only the beginning.