In global discussions about economic resilience, financial exclusion rarely gains sufficient focus. It seldom dominates headlines and almost never commands the urgency reserved for security or geopolitical threats. In Israel, however, access to fair credit defines the economic reality of hundreds of thousands of households, small businesses, and nonprofits. And the limits they encounter are embedded in the structure of the market itself. 

Israel’s banking system is highly concentrated. We have 8 banks servicing an average of 1.3m customers each whereas most countries in the western world have hundreds or even thousands of banks. Credit decisions are centralized, risk appetite is narrow, and in periods of uncertainty capital tends to contract rather than expand. The result is not only higher prices, but systematic exclusion: viable households, enterprises, and community institutions operating outside the formal financial system because the system was never built to assess their full economic context.

Daniel Hahiashvili, Israel’s Supervisor of Banks, spoke about these same issues at the Ogen Conference this past December. Long term resilience, he argued, depends on competition, not as an abstract principle, but as a practical mechanism. Enabling new entrants, increasing transparency, expanding open data, and making switching between banks simpler and more accessible are structural conditions that determine whether real choice exists in the market. These are not technical reforms. They are the foundations of a more inclusive system. It is refreshing to hear a banking regulator speak in this way. 

Competition produces social outcomes. It redistributes power, increases accountability, and strengthens trust in institutions. When information is accessible and mobility is realistic, consumers and businesses gain agency. Israel needs banking competition, there is little argument on this fact. There are players that are beginning to appear, but here’s the thing, they are all vying for the upper-classes. Israel needs these new banks but it also needs a social bank working for low and middle-income families; small businesses and nonprofits which have proven their necessity in an ever-changing Israeli landscape. 

A social bank introduces a different organizing logic into the financial system. Deposits operate as mission driven capital. Financial sustainability aligns with social value creation. Credit functions as a development tool rather than a gatekeeping mechanism, assessing viability in context rather than only through standardized risk profiles that systematically exclude entire communities. Customers gain the ability to place their money in institutions that reflect their values alongside their financial priorities. Trust becomes part of the institutional infrastructure, not a marketing layer. Every customer is a VIP.

At Ogen, we are advancing our vision to establish the country’s first nonprofit social bank. We believe that this model can change the economic reality of millions and realign how value is defined in banking. Value is no longer limited to margin and profit. It includes resilience, inclusion, and long term economic stability. It includes the capacity of a financial system to support recovery, growth, and community level development. It reflects the system’s ability to serve populations that traditional risk models consistently overlook.

Importantly, this direction aligns with the regulatory trajectory. The Bank of Israel’s emerging framework for enabling new entrants, including proportional and tiered supervision, reflects a growing understanding that system resilience is strengthened through diversity. New digital banks and mission driven financial institutions, contribute to a more balanced system. They expand access, increase transparency, and raise expectations across the market. They introduce pressure for better service, clearer pricing, and more responsive financial products.

At the same time, regular competition alone is unlikely to resolve deeper structural gaps. In highly concentrated systems, new entrants often gravitate toward the most profitable customer segments, while households, small businesses, and nonprofits facing the greatest barriers to credit remain underserved. Without additional enabling conditions, the benefits of competition risk remaining uneven.

For social banking to become a meaningful pillar of the financial system, it requires backing beyond general pro-competition reforms. That backing can include enabling policy frameworks, appropriate tiered regulation, and public-sector support that lowers barriers for mission-driven institutions while maintaining rigorous standards of stability and consumer protection.

There is also a role for capital holders themselves. Upper-income households and institutional depositors shape the financial system through where they choose to place their money. Social banks offer a model in which deposits can generate financial returns while also supporting economic resilience, local growth, and social outcomes. This approach reflects a growing recognition that capital can pursue a double bottom line, allowing investors to do well financially while also doing good economically and socially.

Social banks represent a structural evolution in banking because they embed this alignment directly into financial infrastructure. They expand access to credit while enabling capital to work efficiently and intentionally, strengthening both the legitimacy and long-term resilience of the financial system.

Sagi Balasha is the CEO of the Ogen Group, leading five non-profit organizations dedicated to expanding access to affordable credit in Israel. He previously served as the CEO of the Israeli-American Council and co-founded Concert to combat BDS efforts against Israel. He has also held significant roles at Beit Hatfutsot and in Israel’s Ministry of Finance, where he played a crucial role in far-reaching structural reforms.