Israel Delays Digital Bank Notifications Amidst Knesset Concerns

The transition of Israeli bank customers from paper to digital notifications has been postponed. Daniell Hachiyashvili, head of the Banking Supervision Department at the Bank of Israel, announced on Friday, November 13, that the deadline for public comments on the new digital notification rules has been extended to November 30, 2026. He assured that the new regulations would not take effect until further discussion in the Knesset's Economic Committee.

This decision follows a letter from five Knesset members from both coalition and opposition parties who demanded a halt to the public consultation process. Hachiyashvili stated that while 92% of banking operations are now conducted remotely, the move to digital is intended to be transparent, convenient, and environmentally friendly, consolidating financial information for easier access. He emphasized that the regulator is monitoring to ensure that customers who do not use digital technologies are not negatively impacted.

The initiative to move to digital notifications began four years ago but was frozen after the events of October 7, 2023. Discussions resumed about 18 months ago, involving consumer protection groups and other stakeholders. According to Hachiyashvili, the majority of the Economic Committee supported the project after their concerns were addressed. The proposed rules would exempt individuals aged 70 and older, and customers who have not used their bank's online or mobile platforms in the past year, from automatic digital conversion. Other customers could be switched after prior notification and explanation, with the option to revert to paper correspondence.

The Knesset members, including Gilad Kariv, Efrat Rayten, Almog Cohen, Ahmad Tibi, and Yitzhak Pindrus, expressed outrage, arguing that the Bank of Israel published the public consultation document on November 3, during a transition period between Knesset terms and before a new Economic Committee was formed. They accused the bank of attempting to bypass parliamentary oversight, contradicting a previous commitment to the former committee. The lawmakers highlighted concerns about "financial blindness," where individuals, particularly the elderly and those with low digital literacy, might miss critical alerts like credit limit breaches or unexpected debits, thus losing control over their finances. They stressed that paper correspondence is a vital service, not a privilege, for these populations and demanded an immediate session with the new Economic Committee to comprehensively review the reform's consequences.

The Bank of Israel's move is seen by the lawmakers as undermining parliamentary control and trust between the Knesset and regulatory bodies. The deputies called for freezing the public hearing process and holding an urgent meeting with the banking supervision representatives and other interested parties once the new Economic Committee is established to reach a consensus. The transition to digital bank notifications is thus delayed but not canceled, pending further Knesset discussions.