Bank of Israel Extends Automatic Account Transfer Service Until 2029 to Support Bank Switching

The Bank of Israel's banking supervision department announced a draft directive on Sunday proposing a three-year extension of the automatic routing service known as "Follow Me" for customers transferring their accounts between banks. This mechanism, designed to automatically redirect charges, credits, and checks from the old account to the new one, was originally set to expire three years after the transfer date. Under the proposed amendment, the routing period for all customers who completed or will complete an online transfer by September 21, 2026, will be extended until October 16, 2029.

The Bank of Israel clarified that the basic legal rule granting automatic routing for three years from the transfer date will continue to apply to new transfers. However, to protect customers who have already switched or will switch in the coming years, a special transitional provision will extend the service for them until 2029. The "Follow Me" system was introduced as part of the "Switch with a Click" reform launched in 2021 to facilitate easier bank switching and increase competition in the financial system. The online platform allows customers to move their banking activity securely, conveniently, and free of charge.

Initially set for two years, the automatic routing service was extended to three years and is now being extended again due to significant ongoing usage beyond the three-year mark, indicating strong reliance by the public. The Bank of Israel acknowledged that further work is needed with banks and entities such as credit card companies, employers, and authorities to improve the update process of new account details and reduce the need for prolonged routing.

The reform has already shown positive results, with over 200,000 customers completing successful online transfers. A recent Bank of Israel research published in May found that the reform doubled the annual probability of switching banks from 0.6% before the reform to 1.4% afterward, especially among younger customers. This structural change has persisted over time and contributed to reduced overdraft interest spreads even for customers who did not switch banks. Nonetheless, the absolute switching rate remains relatively low across all households.

Extending the routing mechanism until 2029 aims to maintain a safety net for customers who have taken competitive steps while continuing efforts to complete technological infrastructure improvements that could eventually eliminate the need for long-term automatic routing.