How to Open a Business Bank Account in Israel
Written by Patrick Wei
Israel, a country at the crossroads of history and innovation, stands as a beacon of technological advancement and cultural diversity in the Middle East. With its vibrant startup ecosystem and world-class research institutions, Israel has earned the moniker “Start-Up Nation,” attracting entrepreneurs and investors from across the globe. The country’s economy is robust, driven by sectors such as high-tech, agriculture, and diamond processing.
Israel’s unique blend of ancient traditions and cutting-edge modernity creates an intriguing backdrop for both business and leisure. From the bustling streets of Tel Aviv, often called the “Mediterranean Silicon Valley,” to the holy sites of Jerusalem, the country offers a tapestry of experiences that captivate visitors and residents alike.
As Israel continues to grow as a hub for international business and tourism, the demand for banking services has increased significantly. The Israeli banking sector, overseen by the Bank of Israel, is known for its stability and innovation. With a mix of large commercial banks and smaller specialized institutions, the sector caters to a diverse range of financial needs.
Overview of the Israeli Banking System
The Israeli banking system has its roots in the Zionist movement at the beginning of the 20th century, even before the establishment of the State of Israel in 1948. Today, it is a highly developed and sophisticated system, playing a key role in the country’s financial landscape and overall economy.
As of 2022, there are ten commercial banks, four foreign banks, and a joint service company for clearing, all supervised by the Banking Supervision Unit of the Bank of Israel. The sector is highly concentrated, with the five main banking groups accounting for over 90% of total assets.
The two largest banks, Bank Hapoalim and Bank Leumi, together control over 60% of banking activity. These banks, along with Israel Discount Bank, Mizrahi-Tefahot Bank, and First International Bank of Israel, form the backbone of the Israeli banking sector.
For more information, please check https://www.privacyshield.gov/ps/article?id=Israel-Banking-Systems
Opening a Bank Account in Israel
Opening a bank account in Israel is a crucial step for anyone looking to establish themselves in the country, whether for business, study, or permanent residence. The process can vary depending on your status — whether you’re an Israeli national, a permanent resident, an international student, or a tourist.
For Israeli Nationals and Permanent Residents
For Israeli citizens and permanent residents, opening a bank account is relatively straightforward. The main documents required are:
1. Israeli ID (Teudat Zehut)
2. Proof of address (such as a utility bill or rental agreement)
3. Passport for additional identification
Most 18-year-olds would have these documents, although they might need a parent or guardian to co-sign if they don’t have a lease in their name. The process typically takes about 3–5 business days for debit card activation.
For more information, please check https://www.finepassport.co.il/banking-and-finances/banks.
For International Students
International students have a slightly more complex process but can still open bank accounts in Israel. They need to provide:
1. Passport
2. Student visa
3. Letter from their educational institution
4. Proof of address in Israel
5. Tax identification number from their home country
6. Student card
7. Certificate of enrollment at the university
Many banks offer student discounts, making it worthwhile to shop around for the best deals.
For more information, please check https://www.finepassport.co.il/banking-and-finances/banks.
For Tourists and Short-term Visitors
Opening a bank account as a tourist or short-term visitor is more challenging but not impossible. The required documents include:
1. Passport
2. Visa (if applicable)
3. Proof of address (which can be tricky for tourists)
4. Tax identification number from the home country
5. Explanation of the need for an Israeli bank account
While possible, many banks are hesitant to open accounts for short-term visitors, and those that do often come with restrictions and higher fees.
For more information, please check https://www.finepassport.co.il/banking-and-finances/banks.
Steps to Open a Bank Account
The general process for opening a bank account in Israel involves the following steps:
1. Choose a suitable bank (research conditions and tariffs on official websites)
2. Visit the bank branch with required documents
3. Make a request to open an account
4. Sign the account opening agreement
5. Pay the minimum amount to activate the card
6. Order a bank card
7. Obtain online banking access
The process typically takes between 40 minutes to 2 hours. (https://welcome-israel.com/blog/opening-a-bank-account-in-israel.)
Popular Banks in Israel
The most popular banks in Israel include:
1. Bank Hapoalim
2. Bank Leumi
3. Israel Discount Bank
4. Mizrahi-Tefahot Bank
5. First International Bank of Israel (FIBI)
For more information, please check https://ybcase.com/en/company-services/bank-accounts/otkrytie-sceta-v-izraile.
These banks offer a range of services and account types to suit different needs. For example, Bank Hapoalim and Bank Leumi are known for their extensive branch networks and English-language services, making them popular choices for newcomers to Israel.
Banking Fees and Costs
When it comes to costs, account opening fees are generally low, around 100 ILS (approximately $28 USD). However, monthly fees can vary significantly between banks and account types. Some banks offer initial fee waivers or reduced fees for new accounts or students. (https://www.finepassport.co.il/banking-and-finances/banks.)
It’s important to consider various banking fees, including:
- ATM withdrawal fees
- Transaction fees
- Monthly account fees
- Checkbook costs
- Exchange rates
- International transfer fees (https://www.finepassport.co.il/banking-and-finances/banks.)
Non-Resident Accounts
Some banks, like the Bank of Jerusalem, offer special non-resident accounts with unique benefits and exemptions. These accounts might be particularly attractive to foreign investors or frequent visitors to Israel.
Many Israeli banks extend the option of “non-resident accounts”. Eligibility for these accounts hinges on the criteria set forth by each individual bank, and it’s important to note that these financial institutions may maintain varying rules and standards. Non-resident accounts offer several benefits, such as exemptions from specific taxes and fees, as well as access to preferential interest rates on deposited funds.
For more information, please check https://ybcase.com/en/company-services/bank-accounts/otkrytie-sceta-v-izraile.
Foreign Banks in Israel
There are currently five foreign banks with commercial activities in Israel: Citibank NA, HSBC Bank plc., Barclays Bank plc., BNP Paribas Israel and State Bank of India. In addition, several foreign banks have representation in Israel, including Bank
Julius Baer & Co., Bank Lombard Odier & Co., Banque Pictet & Cia SA, CBH Compagnie Bancaire Helvetique S.A., and others. (https://www.privacyshield.gov/ps/article?id=Israel-Banking-Systems.)
Islamic Banking in Israel
While not as prevalent as in some neighboring countries, Islamic banking services are available in Israel, particularly catering to the country’s Arab population. These services adhere to Sharia law, which prohibits the charging or paying of interest. Instead, Islamic banking products often involve profit-sharing arrangements or fee-based services.
Some Israeli banks have partnered with Islamic financial institutions to offer these services, recognizing the growing demand for Sharia-compliant banking options. There’s evidence of fintech companies developing solutions for Islamic banking. For instance, Tuum has launched foundations for Islamic Banking and Finance solutions.
For more information, please check https://tuum.com/news/tuum-launches-foundations-for-islamic-banking-and-finance-solutions-a-strategic-move-towards-delivering-comprehensive-sharia-compliant-financial-services/.
Digital Banking in Israel
Israel is known for its technological innovation, and this extends to its banking sector. Many Israeli banks have embraced digital solutions to enhance security, streamline operations, and improve customer experience. For example, Bank Leumi launched Pepper, a fully mobile bank, in 2017. This digital-only platform allows customers to manage their accounts, make payments, and even apply for loans entirely through a smartphone app.
From https://en.globes.co.il/en/article-israeli-banks-subsidize-customers-in-tech-race-1001177902.
Other banks have also invested heavily in digital infrastructure. Bank Hapoalim, for instance, has developed advanced AI-powered chatbots to assist customers with queries and transactions. These digital innovations not only make banking more convenient for customers but also help banks reduce operational costs and improve efficiency.
Challenges for Non-Residents
Non-residents may face several challenges when opening a bank account in Israel:
1. Residence status: Israeli banks typically give preference to residents over non-residents.
2. Currency exchange: Non-residents may have to consider currency exchange rates and fees, especially if they want to have accounts in multiple currencies.
3. Regulatory Compliance: Non-residents may face additional checks to ensure compliance with Anti-Money Laundering (AML) and Know Your Customer (KYC) requirements.
4. Physical presence: Some banks may require non-residents to visit a branch in person to open an account. (https://ybcase.com/en/company-services/bank-accounts/otkrytie-sceta-v-izraile.)
Tips for International Students and Visitors
1. Consider opening a student account if you’re eligible, as these often come with reduced fees and additional benefits.
2. If you’re a U.S. citizen, be aware that you must report your Israeli bank account in your annual income tax filing, regardless of its duration and total sum.
3. When opening an account as a non-resident, the bank clerk will assign you a fake ID number. Make sure to write this number down, as you’ll need it for future services provided by the bank.
4. Consider bringing an ATM card from your home country with a 4-digit PIN, as this can be a convenient way to access funds initially.
5. Be aware that some services, such as depositing checks, can only be done at the branch where you opened your account, but withdrawing money from an ATM can be done from any bank.
For more information, please check https://en-exact-sciences.tau.ac.il/banking.
Conclusion
Opening a bank account in Israel, while potentially challenging for non-residents and short-term visitors, is a manageable process with the right information and preparation. The Israeli banking sector offers a range of options to suit different needs, from traditional banks with extensive branch networks to innovative digital banking solutions.
As Israel continues to attract international talent and investment, its banking sector is adapting to meet the diverse needs of its growing global clientele. Whether you’re a student, a business professional, or a tourist, understanding the banking landscape in Israel can help you make informed decisions about managing your finances during your stay in this dynamic country.
Remember to research thoroughly, compare different banks and their offerings, and don’t hesitate to ask for clarification on any aspects of the account opening process or fees structure. With careful planning and the right approach, you can navigate the Israeli banking system successfully and enjoy a smooth financial experience during your time in Israel.
This story was written by a graduate student at NYU. Read stories about other 50 countries here