Developing a Financial Inclusion Program for Israel's Arab and Ultra-Orthodox Communities

Israel’s Arab and Ultra-Orthodox communities have lower participation in the financial system than the general population. The Bank of Israel (BoI) tasked the team with identifying policies and strategies to attain higher rates of financial inclusion based on lessons from the experience of selected countries.

The first phase of the project identified countries whose experiences addressing financial inclusion issues were relevant to Israel, in consultation with BoI. The second phase focused on specific approaches and evaluating their success. particularly for minority and indigenous populations. The team’s research was supplemented by interviews with experts and policymakers with experience in the countries studied. The team developed a framework for evaluating financial inclusion. This framework categorized financial inclusion based on a) rates of financial literacy, b) trust-building, anti-discrimination, and consumer protection, c) credit and financial services opportunities for minority communities, and d) digitization of financial services.

Using this framework, the team made recommendations to the Bank of Israel to increase rates of financial inclusion among the Arab and Ultra-Orthodox communities pertaining to: 1) a national strategy for financial literacy; 2) a set of rights and protections for consumers; 3) micro-credit programs to introduce underserved populations to financial services, and 4) a community outreach system that conducts targeted initiatives to promote financial literacy, provides training, and offers access to services.