Sign of the times: All of Israel’s FinTech innovation geniuses have left the country and taken their brilliant ideas with them

“It is too light a thing for you to be My servant, to establish the tribes of Jacob, and to restore the scions of Israel, and I shall submit you as a light unto the nations, to be My salvation until the end of the earth” – Isaiah 49:6

There was once a time when the electronic financial markets business and all of its components could be compartmentalized into region-specific skillsets.

London was always the institutional center of interbank and non-bank prime brokerage and liquidity, along with the world’s best quality and most developed commercial connectivity which underpins the world’s financial markets economies and handles the lion’s share of interbank orderflow.

This accolade still bestows itself on London today.

New York was always the trans-Atlantic read-across to London, with the investment banking center for the entire world lining Wall Street, along with its own in-house technology, as well as the proprietary trading centers which adorn Manhattan and stretch toward their exchange-traded futures giants as peers in Chicago.

This accolade still bestows itself on New York today.

Sydney has been a commodities, minerals and raw materials base for four generations, with natural resources having provided the basis for a super-organized and widely respected banking business, backed by highly astute regulators and a good business environment, giving rise to a multitude of very well respected retail FX margin trading companies that uphold the standard worldwide and form the bridge between the renowned giants of the West and the all important APAC region.

This accolade still bestows itself on Sydney today.

In addition to these evergreen centers for the global electronic trading industry, there is Hong Kong, with its gold bullion and other specialist asset classes, as well as its standing as a veritable aircraft carrier for the global banks, ECNs and hosting firms to be supervised enough by the Chinese government and allow some degree of access, and Singapore, Asia’s largest institutional and banking center.

Israel was never a center of actual trading, but was always synonymous with the brilliant minds that invented every ancillary service from digital marketing and conversion funnels that have brought tremendous efficiency to retail brokerages, Plus500 being a case in point, to social trading networks that have prospered on a gigantic scale across China – read eToro’s efforts with PingAn as very much an example where other social trading ventures wilted and disappeared.

Post-trade processing firms such as Traiana, which is now part of Michael Spencer’s ICAP, originated in Tel Aviv, as did automated optimization tool Optimove, which was listed by Forbes as being one of Israel’s most ingenious startups ever.

Some of the world’s most renowned electronic brokerages were founded by Israelis, and have risen to become publicly listed firms in New York and London.

This accolade, however, no longer bestows itself on Israel.

Gil Mandelzis, CEO and founder of Traiana, graduated from Tel Aviv University in 1994 with a BA in Business and Sociology. Just six years later, he founded Traiana Inc, and became CEO, starting the company from nothing, and pivoted successfully through several business models to create dominant position in capital markets transaction processing. Grew business to $15M with 100+ employees in 15 countries, becoming renowned as one of the world’s most prominent post-trade processing companies.

Mr Mandelzis secured $40 million in venture capital from Sequoia Capital and sold the company to ICAP in 2007 for $250 million which became the subject of a Kellog Business School case study.

Where is Mr Mandelzis now? New York.

Pini Yakuel, an urbane young gentleman from Tel Aviv, completed his Master of Science degree at Tel Aviv University in 2007, in Industrial Engineering and Management before founding two technology startups, one being Mobius Solutions, the other being Optimove, which he founded in 2009.

The Optimove Customer Marketing Cloud is used by hundreds of brands to increase customer engagement, spend and loyalty. The software implements a systematic approach to planning, executing, measuring and optimizing a complete, hyper-targeted CRM plan.

Optimove consolidates, mines and models customer data, dynamically grouping customers into micro-segments, and forecasting their future behavior and value.

Just two years ago, Forbes pointed this technology out as one of Israel’s most promising among all high tech startups.

Where is Mr Yakuel now? New York.

Optimove is headquartered in New York, and is a completely American company.

Social trading has died a death. There is very little evidence of the large firms that used to dominate, and most of that technology came from Israel.

The only one in existence is eToro, which is a social investment platform.

Founded by young genius Yoni Assia after he graduated from Israel’s highest performing academic institution, the international “Interdisciplinary Center” in Herzliya, where he graduated with a Master of Science in Computer Science, Mr Assia was then a programmer in the IDF before founding eToro in 2006.

Whilst Mr Assia still resides in Israel and the company still has its base there, it is clear that China is where it is at for the company.

A combination of Mr Assia’s aplomb along with that of APAC CEO Jasper Lee, eToro embarked on a massive corporate venture with PingAn Bank to place the social trading platform within PingAn’s proprietary system, giving it a massive distribution channel across China.

I met with Mr Lee and also Lance Liu of PingAn Ventures which invested in eToro on separate occasions, in Guangzhou and Shanghai respectively, to look at this, and can deduce that eToro is pretty much a Chinese entity these days – and is doing very well indeed.

eToro has for many years trodden a very different path from its peers, and to great gain, especially in today’s post-social trading era in which separate platforms that provide social trading to retail customers whilst charging a license fee to brokerages have become extremely passe.

“eToro created a wholly owned foreign enterprise (WOFE) which is in the process of registration and is a fully owned subsidiary under eToro. The market here in China is less strict than it was before, and it is less hard to open in China as it had been previously, as long as there is government oversight and input” Lance Liu, Head of Investment, Ping An Ventures told FinanceFeeds.

An important aspect to bear in mind is that eToro has been operating for eleven years now, and has a completely globalized structure. “In China, the environment is completely unique” said Mr. Lee. “China is home to a huge potential client base, but localization is vital. eToro is a social platform so that people can communicate with each other, therefore to make our entry into China successful, we had to make a series of vital amendments such as the ability to be able to translate all the account details from English (which globally is the largest language base) in one click into Chinese” Mr. Lee told FinanceFeeds.

“There are sutble differences between Chinese platform functionality compared with that of other regions that had to be taken into consideration too. For example, Chinese traders see the up and down indicators in different colors to those offered on platforms ovesees. In China, if the market moves up, the indicator is displayed in red, wehreas if the market is going down, it is displayed in green which is the opposite of the rest of the system used in the rest of the world” – Jasper Lee, CEO APAC, eToro

For those with a memory that stretches back to the last part of the previous decade, a very long time in the start-up world, Rachely Esman will be a familiar name.

Ms Esman started Jivy Group, which owned the Marketspulse brand of trading platform software, which, along with co-founder Shai Hamama, she developed in order to approach the Japanese market.

Marketspulse is based in Herzliya, and Ms Esman and Mr Hamama’s technological and academic credentials are right up there with the best.

His education ranges from several science and mathematics degrees from Bar Ilan University, from which he graduated at a remarkable 19 years of age, before joining the Israel Defence Force and rising to Head of Development, a position in which he led the design and implementation of some of the most technologically advanced systems on earth.

Where are Ms Esman and Mr Hamama now? San Francisco and Sydney respectively.

Ms Esman went on to found Silicon Valley startup Wescover, taking a whole range of Israeli talent with her to the Bay area.

Yoni Avital, founder of Tradesmarter, a company which gained minimal market share simply because it was a properly designed platform for proper options brokerages, as opposed to the chop-shops run by criminals that are now dominating the headlines, has left the country for Singapore, where he has gone on to found Backpack.io, an all in one back office SAAS platform for financial services companies.

On a plane journey recently, I met with Mr Avital, whose elevated status today is a result of his tenacity in R&D and not having been swayed toward the grab-a-quick-buck-with-no-thought route. Good for him.

Roy Saadon this week launched a new company – Access Fintech – which echoes the current need for Fintech, regtech and phrases such as the ‘reconceptualisation of financial services’ which have become commonplace in today’s financial markets, with every self-respecting bank boasting a distributed ledger technology (DLT) research department.

Mr Saadon was instrumental in the foundation and success of Traiana, alongside Gil Mandelzis. Where does Mr Saadon now live? London.

His company is also London based.

These are just a few cases in point. It would be quite easy to wax lyrical about all of the “Yordim” (that being a perjorative Hebrew phrase for someone who leaves Israel permanently) who have been instrumental in building up this industry on its technological backbone and are continuing to do so, but from the diaspora, in the top quality centers of London, New York, Sydney and San Francisco.

Who is left?

The shameful part in all of this is that the absolute dross that is left behind is the core reason why so much damage has been done globally to the genuine retail electronic trading industry.

Pseudo-gangsters who are semi-literate and bear no resemblance to any member of the fintech or financial services industry now run amok with their affiliate lead touting and binary options brands which have been proven to be the work of massive mafia-style crime gangs who threaten anyone who crosses them with physical violence, and have ripped off thousands of unsuspecting people globally, seeing this as a badge of honor.

A trip to the “Bursa” area of Ramat Gan, Israel’s center for this sector today will provide an insight into the low-class stature of most of these entities and their owners.

Just as it looked as though the Israeli government was about to do the right thing and extinguish this giant racket, it backed down, proving the exact reason why so many good quality entities and their shareholders and owners move abroad.

Israel has proven itself to be a hotbed of corruption and menacing business behavior, as the binary options fraudsters sit tight, quietly confident that they will be able to carry on their sordid businesses under a different name but with the same components.

A report this week by Israel’s police has confirmed what FinanceFeeds has been saying for a very long time, that being the operation of these brands and market makers by massive crime bosses from the underworld.

A senior Israel Police officer told a Knesset panel on Wednesday that Israeli crime kingpins are behind the binary options industry and that organized crime in the country has been massively enriched and strengthened as a result of law enforcement’s failure for many years to grasp the vastness of the problem.

In his speech, the senior Israel Police officer told a Knesset panel on Wednesday that Israeli crime kingpins are behind the binary options industry and that organized crime in the country has been massively enriched and strengthened as a result of law enforcement’s failure for many years to grasp the vastness of the problem.

“Our eyes have been opened,” said Superintendent Gabi Biton, who investigates financial fraud and money laundering. “What we’re seeing here is a massive organized criminal enterprise. We are talking about criminals at various levels of crime organizations, up to the very top.”

When bearing in mind that the entire country is run and operated by cartels, ranging from supermarkets to national port authorities, as outlined in my synopsis earlier this week in which I cited the entire Knesset Committee dialog on banning binary options to be complete hogwash and the absolute pinnacle of an intrinsically corrupt nation whose government is unable to rein in a brutal and primitive business environment which alienates the entire world and the sensible element of Israel’s population to the extent that they leave the country.

FinanceFeeds is aware of several physical attacks on dissenters, and has been on the receiving end of such also. In 26 years in this industry, I have never seen such behavior anywhere globally, nor have I seen such a rampant surge in a false financial environment operated by the underworld that, it appears, actually controls the government.

Sgt Biton said this week “Because binary options is such a lucrative scam, established organized crime groups gravitated toward it. They saw the huge economic potential in binary options,” he added, explaining that these organized crime bosses then hired professionals, foreign language speakers and payments experts to help them carry out their fraud.

“It has grown to monstrous proportions,” he added. “I can say that we are discovering new paths of money laundering through this crime that we were not aware of.”

In a nation in which families own the banks, there is absolutely no accountability for any actions whatsoever, and even worse, where people who push their way through everyone, destroying everything along the way, are regarded as ‘kings’ and behave in a loud and proud manner, boasting about how they prospered, yet none of them have ever finished school or are able to read a business proposal of any kind past the title before shouting their way through their opportunist lives.

I write this from London, and it pains me greatly that this is what has become of what was not so long ago a great power in the technological and R&D sectors of the global financial world, its young and urbane population being a ‘light unto the nations’ as prescribed 2000 years ago.