Digital Bank Accuses Traditional Lenders of Anti-Competitive Practices

The digital bank One Zero has filed an urgent and detailed complaint with the Israeli Competition Authority, accusing major traditional banks of employing aggressive retention tactics to stifle competition. One Zero alleges that these banks offer substantial financial incentives, but only to customers who have already begun the process of switching banks. According to the complaint, this practice creates an anti-competitive mechanism where existing customers effectively subsidize the preferential terms offered to those leaving.

As a key example, One Zero cited a case where Bank Leumi allegedly offered a customer seeking to switch a retention package. This package reportedly included an immediate NIS 500 bonus for canceling the switch and keeping the account at Leumi, plus an additional NIS 2,100 spread over three years in exchange for transferring their salary. One Zero argues that offering financial benefits conditional on closing an account at a new bank is not fair competition but a method to re-bind customers and paralyze new entrants.

In their appeal to the Competition Authority, One Zero is requesting an explicit prohibition on rewarding customers for closing accounts at competing banks. They also seek broader restrictions on customer retention for those who have moved to new banks within their initial years of operation, aiming to allow new players to establish themselves and offer a genuine alternative to the traditional banking system.

The Competition Authority confirmed receipt of the letter and stated that the matter is in the initial stages of review. Bank Leumi responded that without full information, a specific case cannot be investigated. However, the bank asserted that it offers attractive retention proposals to its customers solely in accordance with the law, regardless of the customer's intended destination bank, and deemed any other claims baseless.