The Strum Reform, Eight Years On — Did Breaking Up Banking-Payments Concentration Actually Work?
In 2016 Israel forced Hapoalim and Leumi to spin off Isracard and CAL to break the banking-payments duopoly. Eight years in, the structural answer is yes; the price answer is no.
The Va'adat Strum (Strum Committee) recommendations, enacted in 2017, forced Bank Hapoalim and Bank Leumi to divest their credit-card subsidiaries — Isracard and CAL respectively — to break the structural overlap between Israeli banking and payments. Eight years on, both companies are public, profitable, and independent. The reform is, on its own terms, the most successful Israeli financial-sector structural reform of the past two decades. The price effects are a more complicated story.
What worked structurally
- Isracard trades on TASE with an institutional shareholder base unconnected to either bank.
- CAL was acquired by Discount Bank, replacing one bank shareholder with another — but breaking the Leumi-CAL link that was the original concern.
- Max (Leumi Card's rebrand pathway) was sold to Warburg Pincus and now Calcalist Group, sitting outside the banking system entirely.
- The acquiring (or remaining) banks no longer have privileged data flow from the card networks.
What didn't move much
- Retail bank fees. The Strum reforms were not designed to lower fees, and they didn't. The BOI's bank-fee comparison data shows essentially unchanged real fee levels through 2024.
- Banking competition more broadly. Strum didn't add a new bank. It didn't change the five-bank market structure or the duopoly's commercial-banking pricing power. The mortgage market has stayed concentrated around Mizrahi, Hapoalim, and Leumi.
- Digital-only entry. ONE ZERO (formerly the planned "Pepper Pay" / Marius Nacht digital bank) launched but at meaningful scale remains aspirational. Pepper (Leumi's digital arm) was quietly wound down.
The harder lesson
Structural reform of a financial system is achievable in Israel. Pricing reform is much harder. The Strum reforms broke the structural overlap and changed who owns what; they did not produce a more competitive Israeli retail banking market. The next reform cycle — likely focused on open banking, payments interoperability, and the digital shekel's retail rails — will have to do that work directly.