Though it has long been the subject of speculation in the world of fintech, this year’s explosion in fintech startup funding has the financial industry asking: is Israel the next fintech disruptor incubator to watch?
Israel’s development as a hotbed of innovative fintech firms has manifested as a steady trend of growth that saw sudden leaps forward early this year. Over each of the last two years, fintech startups in the Middle Eastern nation raised around $1.5 billion in investment funding. By the end of the first quarter of 2021, IVC Research Center reports, over $1.1 billion had already been raised.
Like in any other incubator for fintech startups, Israeli firms have focused on a variety of financial sectors, from traditional banking and lending to more cutting-edge payment platforms. Industry analysts point to voice technology as being an area in which Israeli firms are poised to take the lead, with big names such as Voca.ai and Bonobo being recent Israeli success stories in this area.
The reasons for Israel’s recent surge in fintech investment are manifold. Among other things, it is generally agreed that the COVID-19 pandemic has provoked a massive leap forward for companies that allow customers to make transactions safely from their homes. For Israel in particular, decades of niche industry disruptors have led to an ecosystem rich in venture capital. Whatever the cause for this explosion in investments, the fact remains that Israel should be watched closely in the coming years.