Starting Wednesday, Israelis can switch banks much more easily. A new system enables bank customers to switch from one bank to another online quickly and at no cost.
Under the new “follow me” service, bank accounts can be switched within seven days, and any charges or deposits reaching the old account will automatically be routed to the new account within two years of the switch. Under the current situation, any debits or credits for a closed account are returned, and it is the customer's responsibility to arrange the transaction.
Users can request to transfer between banks via the banks’ websites and at bank branches, the central bank said. Accounts with complicated issues or legal holds against them may not be eligible for the program.
Customers with questions, or needing assistance, should contact the new bank, not the old one, the Bank of Israel clarified. Information is also available at switchbank.org.il.
The system, which was developed over more than three years, is part of a series of steps initiated by the Bank of Israel and the Finance Ministry to enhance competition in the financial system. While many Israelis say they are unhappy with their banking services, very few actually switch banks, due to the high costs and inconveniences involved.
“Completing this step is another stage on the way toward an open, transparent, and more competitive financial system that we are promoting on several fronts, and that will enable customers to easily and conveniently choose the providers of the various financial services they use,” said Bank of Israel Governor Prof. Amir Yaron. “We will continue to utilize the digital age available to us in order to advance processes and reduce barriers in the financial system and in the payment systems.”
“Rapid transfer from one bank to another is an important step and an integral part of the policy of enhancing competition that we have adopted in various industries,” Finance Minister Avigdor Liberman added. “We will continue working to reduce bureaucracy in significant focal points that ease our daily conduct.”
The new system will enable customers to easily move credit balances in shekels and in foreign currency, debit balances in shekels and in foreign currency, authorized debits of a current account, checks, securities (Israeli and foreign), credit card activities and standing orders. Regarding loans and mortgages, as well as savings accounts, special arrangements were made, according to which the banks will work out each case on an individual basis with their customers.
The new system will not be available for customers of Union Bank, which is expected to be merged with Bank Mizrahi Tefahot, and Bank of Jerusalem, at which the number of customers managing a current account is very low. Customers of those banks interested in switching to another bank can do so using a different mechanism, the central bank said.
Switching to the new First Digital Bank will be available as of April 1, 2022, it added.