Financial Information Services Law: A Quiet Revolution in Managing Your Organization’s Banking Data

A Bit of History: How Did It All Begin?

Until the early 2010s, banking data for both private and business customers was almost entirely locked within bank systems. A customer who wanted to analyze their activity, compare offers, or use a third-party financial service encountered numerous obstacles—scanned files, fragmented logins, and passwords for each individual bank. With rapid technological developments and inspired by global reforms such as the European PSD2 directive, a government committee was established in Israel to promote innovation in the financial market. One of its key recommendations: to allow regulated non-bank entities access to financial data—only with the customer’s explicit consent. The result: In 2021, the Financial Information Services Law was enacted as part of the Economic Arrangements Law. It established Israel’s first regulatory framework for the responsible and secure use of banking data. Its goal: to encourage competition, improve services, and give customers—especially businesses—real control over their own information.

What Does the Law Actually Say?

The law allows an authorized financial service provider (such as METEOR) to receive direct, controlled, and secure access to data regarding a customer’s bank accounts, credit cards, and savings—only after receiving the customer’s explicit permission. The data is retrieved through a dedicated API interface from the banks, in a unified, transparent, and secure manner.

The law applies to two types of players:

• Financial Information Service Providers – Entities like METEOR that analyze the data on behalf of the customer.
• Data Holders – Banks and financial institutions that hold the data and are required by law to share it securely.

Service Provider Obligations Under the Law

The Financial Information Services Law does not grant unrestricted access. It requires service providers to operate under strict obligations. The main ones include:

1. License and Regulatory Approval

Every financial data provider must obtain a valid license from the Israel Securities Authority, including background checks, financial stability, secure technology infrastructure, and qualified stakeholders.

2. Data Security and Privacy

Providers must protect data at the highest standards, including encryption, access control, continuous monitoring, two-factor authentication, and managed permissions for every system user.

3. Limited Use Based on Authorization

Data may be used solely for the purpose explicitly approved by the customer—such as cash flow analysis, management reports, or budget control. Any other use—including marketing—is prohibited unless separately and clearly authorized.

4. Full Transparency to the Customer

The customer must receive a clear explanation about what data is collected, how long it is stored, who is involved, how to revoke consent, and all key details of the service.

5. Ongoing Reporting to the Securities Authority

This includes periodic reports, incident reports, changes in ownership or the user interface, and compliance with evolving regulatory requirements.

How Is It Connected to Open Banking?

Though the terms are related, it’s important to distinguish:

• Financial Information Services Law deals solely with access to data for analysis, management, consulting, etc.
• Open Banking allows for actual transactions—like transferring funds or opening accounts—through third parties.

To dive deeper into this topic, read our article on Open Banking.

What Does This Mean for Finance Teams?

While the law is aimed at service providers, the real beneficiaries are the finance teams within organizations. Thanks to the law—and with the help of technology such as METEOR—you gain access to powerful advantages, including:

• Unified access to all organizational bank accounts
• Up-to-date data for planning, tracking, and oversight
• Time savings and reduced human error
• Greater transparency for audits and compliance
• Peace of mind knowing your data is managed legally and responsibly

In Summary

The Financial Information Services Law is more than just regulation—it’s a smart infrastructure that enables organizations to manage their finances transparently, efficiently, and securely. At METEOR, we operate in full compliance with regulatory requirements, offering a range of solutions and benefits that help our clients thrive.