“The banking industry as we know it today is about to face a storm,” predicted Bank Leumi CEO Rakefet Russak-Aminoach, Globes reported on Thursday.
Speaking at the opening of the FT Innovate conference in London, Russak-Aminoach said that prevailing conditions which have until now insulated the banks from far-reaching changes no longer obtain.
“Until today there was no incentive for us to change,” she said. “The profits were good and the defensive moat, obstacles for full entry – protected us from invasion. The banking industry has been securely fortified for a long time. But that moat is now flooding its banks and we are clearly seeing this process in which all the obstacles to entry are starting to collapse. Consequently, if we don’t undergo a transformation, we will simply become extinct.”
The Bank Leumi executive has been putting her (bank’s) money where her mouth is, leading a digitalization of the bank, soon to be reflected in the opening of the Pepper digital bank.
Russak-Aminoach backed up the forecast with data showing that 73 percent of millennials “would prefer to receive financial services from companies like Apple, Google or Amazon than their bank.”
This, she said, revealed a growing lack of trust in conventional banks that demands a serious response.
On the Pepper bank, she said: “We decided to set up a new venture that will be completely separate from our core business even if the significant thing is that we are competing with ourselves. I absolutely believe that the fact that Pepper is being established in Israel – the startup nation – where global companies like Waze and Taboola and many others were born – will help distinguish us and that ultimately we can also make Pepper into a global company.”