“Flanker” banks are seeking to combine the old and new

AT THE ENTRANCE of the glass-and-chrome headquarters of Bank Leumi in Tel Aviv, look left and you will see Mani House, one of the city’s oldest buildings. From a balcony peers a statue of Theodor Herzl, the Zionist leader known as the Father of Israel. The marriage of historical and modern is fitting for Israel’s oldest bank, established before Israel itself, in London in 1902. For Leumi also owns Israel’s youngest bank, launched in 2017.

Pepper is Israel’s first bank aimed at “millennials and millennials at heart”, says Rakefet Russak-Aminoach, Leumi’s chief executive. It is also Israel’s first mobile-only bank, the first to charge no fees or commissions and the first to allow current accounts to be opened without visiting a branch. It consists of two apps: one that resembles a Facebook feed, showing transactions, money-management tips and articles related to the account-holder’s spending; and a second, Pepper Pay, for money transfers. A third in development, Pepper Invest, will offer a cheap, simple interface for researching, buying and selling stocks.

Pepper has not published customer numbers, but there are “tens of thousands”, says Ms Russak-Aminoach, and new ones are being added faster than at any other Israeli bank. That is despite the national regulator requiring Pepper customers also to have a bricks-and-mortar...

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