Nov 15, 2023

7 Min Read Ariel Blum Oded Israeli had just started to speak on a Zoom call, but he paused quickly. There were noises outside and he needed to calm his daughters in the other room. "Everybody is on edge here," said Israeli, a technology professional who lives near Tel Aviv. Like a lot of fintech workers in Israel's technology hub, Israeli has faced numerous burdens during the war that followed the Hamas terrorist attacks on October 7. Some of these workers spoke with American Banker about their experiences over the past month. Israeli consults and works with fintech, crypto and payment startups, and has about two dozen clients in a country with more than 500 tech startups . His career, which has lasted about two decades following his discharge from military service, includes roles at Amdocs and IBM, where he worked on billing and mobile payment products. It's a life that has brought him into contact with an entire industry — and by extension, an entire country. "There is no person who doesn't know someone who was killed or knows someone who knows someone," Israeli said. "It's two degrees of separation, and we're still not over that." Much like fintech workers in Ukraine saw their lives suddenly pivot from coding and conference rooms to anxiety and survival following the Russian invasion in 2022, Israel's financial technology workers who were planning conferences and joking in break rooms two months ago are now preoccupied with identifying the nearest bomb shelter, organizing with neighbors to patrol their streets and in some cases heading to the front lines. "You have to go to work knowing that at least once or twice per day you have to run to the shelter of your office building to avoid rockets, thinking about where your kids are … are they at school running to their shelters there or are they at home?" Israeli said. "And the doors to the safe rooms are heavy and hard to operate. Can the kids shut them?" A growing sense of fear When the war began, some large banks, including JPMorgan Chase and Goldman Sachs, told staff in Tel Aviv to work from home, according to Reuters , which reported that many financial institutions and payment firms have made similar adjustments. "The first weeks are always about getting to understand what happened, of trying to digest things," said Gal Krubiner, CEO of Pagaya, which employs about 700 people, with about 200 in Tel Aviv. Pagaya uses payment data, artificial intelligence and other sources of information to inform lending decisions for buy now/pay later loans and other products. Its clients include Visa and Ally. "We are very resilient. There is a very strong will to get back to reality," Grubiner said. Pagaya's staff has relied on support from its New York headquarters for continuity. It has also invested in local relief efforts, such as providing supplies for people who have been displaced or lost family members. The firm has been able to maintain its production schedule and work on new bank partnerships, including a deal with one of the five largest banks in the U.S. "In this economic time, it's particularly important to be able to get our product out there," Krubiner said. Another fintech, Bluevine, is headquartered in Jersey City, New Jersey, but has more than 150 employees in Tel Aviv. About two dozen of those employees have been called up for military duty as reservists. "We are grateful that no employees were physically injured in the [October 7 attack]," said Yael Malek, chief people officer at Bluevine. "But we're not discounting the mental and emotional toll." The firm sells products for needs such as business payments . The company initially opted for remote work, though it has reopened its offices at the request of the Bluevine staff, according to Malek. The company has added paid volunteer days, and staff in Bluevine's U.S. and India offices have regularly sent care packages to staff in Tel Aviv. "There is no person who doesn't know someone who was killed or knows someone who knows someone," said fintech veteran Oded Israeli Oded Israeli Most financial and technology companies in Israel operate in or near Tel Aviv, which is about 44 miles from Gaza, where the war is taking place. But the danger has been broader, given frequent rocket attacks on Israel and concerns over further terrorist attacks. "We were sleeping and at 7:30 in the morning [on October 7] when our phone went off. And there was an explosion about 100 yards away," said Ariel Blum, founder and CEO of Receive, a Tel Aviv-based payment company that is under development. Blum's wife is pregnant, and they have a two-year-old daughter. "We're in stealth so it's bad timing," said Blum, who has worked for Melio, Green Dot and American Express during his career in the payments industry. "But I've had more than a thousand people reach out over the past few weeks, so I'm grateful." Receive has continued working toward launch as Blum and his staff do volunteer work, such as delivering food. As the war progresses, there's anxiety about what will happen next. "Last night I was in a shelter three different times," Blum said. "I was walking my dog and a siren went off and I ran into a random building. There's a growing sense of fear. It's hard to work and stay focused and remain optimistic." Programmers and soldiers Technology is Israel's largest industry, employing about 14% of the country's workforce, accounting for more than more than half of the country's exports and 20% of its GDP, according to Israel Hayom. "We call tech the business model of Israel," said Esti Rosen, innovation diplomacy director for Startup Nation Central, a Tel Aviv-based nonprofit technology consultant and non-government organization. The Israel Innovation Authority has formed a $25 million fund for startups to mitigate interruptions due to the war, Rosen said. The importance of the technology sector could create a staffing problem given the number of Israelis who serve or may serve in the military. More than 360,000 military reservists were called up in what's said to be the largest such mobilization in Israel's history. Receive's lead sales person has deployed south of Tel Aviv, part of an elite army unit, Blum said. "It's amazing, the day before [October 6] we were laughing in our office and talking about fintech, going to Money20/20, all of those kinds of things." April 25, 2023 9:00 PM The military call-ups have come during what was already a difficult time for the Israeli technology industry, which has slowed as part of a global technology slump. The number of technology workers in Israel increased by 7% in 2022, down from 12% growth in 2021, and the war has raised concerns of a deeper pullback in technology investment due to worries about safety or staff shortages. Most Isrealis serve two or three years in the military following high school, and then serve in the reserves for about 20 years afterward. The reserve call-up has swollen the military force to about a half million people in a country of about 9.4 million. "These duties have impacted the startup and tech companies' ability to work," Israeli said, adding that he has found time to do his work while also participating in a community safety effort. Israeli lives in a suburb of Tel Aviv that is about a two-hour drive from Gaza and 15 minutes from the West Bank. He and his neighbors have formed a "city guard" group to protect the neighborhood in the event of further violence. Israeli is one of about a half dozen people who lead the group, which has more than 300 members who are licensed and trained to use firearms. The group takes shifts patrolling the town's streets, parks and playgrounds. "We're lawyers, tech workers, financial services executives," Israeli said. "You don't know if the military can get here on time.There is some training involved. Most of us have not used guns in ages." To respond to the war, Israel's technology sector can draw on experience from past conflicts, and many firms have continuity plans that consider the impact of warfare, Rosen said. And since many Israel-based technology firms work with Ukrainian partners, there has also been an opportunity to share information, she added. "The impact here near Tel Aviv hasn't been the same as Ukraine," Rosen said. In Israel, the relative lack of damage to infrastructure has enabled offices to operate without the workarounds required in Ukraine, such as emergency generators, Rosen said. "After an initial shock, people at tech firms are starting to address shortages," Rosen said. Technology companies are rotating staff and prioritizing projects, but there could be some challenges to smaller startups if the war were to linger, she said. People are going back to work with a sense of trauma, but also with an understanding that the technology sector is needed to support the country's economy, which relies heavily on technology exports, Israeli said. "We don't sell tech internally," Israeli said. "We sell tech around the world."