One Zero Files Anti-Competition Complaint Against Major Israeli Banks Over Retention Tactics
One Zero Digital Bank filed an urgent complaint with the Israel Competition Authority, accusing major traditional lenders like Bank Leumi of predatory retention tactics and anti-competitive practices to block customer migration.
Competition in Israel's banking sector has escalated sharply, with digital lender One Zero Digital Bank filing an urgent and detailed complaint to the Israel Competition Authority. The digital bank accuses traditional major lenders of employing aggressive practices and predatory retention offers designed to block competition and prevent long-term customer migration.
Predatory Retention Tactics
According to the complaint, major banks are selectively offering extreme financial perks exclusively to customers who have already initiated account transfer procedures to a competitor. One Zero argues this constitutes an anti-competitive mechanism where the majority of bank customers essentially subsidize preferential terms granted solely to departing clients.
As a primary example, One Zero cited a case involving Bank Leumi, which allegedly offered an aggressive retention package to a client attempting to switch to the digital bank. The proposal included an immediate financial grant of 500 NIS for canceling the transfer, alongside an additional 2,100 NIS distributed over three years contingent on salary transfers.
Regulatory Demands and Responses
One Zero emphasizes that conditional financial incentives to abort switching to a new bank do not represent fair competition, but rather a mechanism designed to shackle customers and paralyze new entrants.
"Such practices are designed to block the development of market competition and prevent customers from moving to new entities in the long run," noted representatives of One Zero.
In their appeal, One Zero urges the Competition Authority to explicitly ban customer compensation for closing accounts at rival institutions. Furthermore, they demand broader restrictions on customer retention tactics targeting new banks during their initial years of operation.
The Competition Authority confirmed receipt of the letter, stating the matter is under preliminary review. Meanwhile, Bank Leumi responded that without full information specific cases cannot be verified, but emphasized that the bank operates strictly within the law when offering retention packages, regardless of the destination bank chosen by the client.
