Israel’s New Digital Bank Pays Customers Instead of Charging Fees

“For the first time in the world, there’s a bank that pays the customer rather than the other way around,” CEO Yuval Aloni told PYMNTS’ Karen Webster.

The promise is intentionally simple: fee-free checking, no charges to transfer or receive money and a recurring payout that shows up in push notifications and monthly summaries. The mechanics are software-driven, but the proposition is meant to be understood in seconds. As Aloni puts it, keep your money here and you’ll see the bank share its economics with you on a regular cadence.

Esh is entering a small, concentrated market (Israel) where the major incumbents offer similar products and have historically paid little or nothing on checking balances. In that environment, there has been scant pressure to compete for deposits. Aloni argues that those dynamics created space for a challenger with clearer alignment between the bank and the depositor and with a model that offers tangible returns on everyday balances.

The 50/50 Rule

At the center of Esh’s model is what it calls the equal-sharing rule. The bank takes 50% of its net revenues after provisions, which is essentially net interest income, and distributes the other 50% algorithmically to customers’ checking accounts. The split flexes with performance. If net interest income rises, payouts grow. If it tightens, they shrink. Before launch, the team tested other ratios, including 80/20 and 70/30 in favor of customers, but found that the equal split was easiest to explain and most trusted by customers in testing. “When the bank shares 50/50 with the customer, everyone understands it,” Aloni said. “Everyone wants it.”

Read more: Esh Bank Unveils Experience That Includes Revenue Sharing With Customers

Delivering that share-out depends on operating discipline. Traditional banks, in Israel and elsewhere, are anchored to aging cores surrounded by hundreds of vendor systems, some modern, some decades old. All create inefficiency and manual work. Esh built a single, integrated stack in-house, an operating system it calls eOS, to replace those handoffs with one end-to-end technology supply chain.

“You want to have a bank that runs like a technology company,” Aloni said. “That’s what we wanted to create.”

Automation and Accountability

Esh writes regulation, risk and anti-money laundering controls directly into code so that key checks execute automatically and are logged for review. Employees supervise machine-run routines rather than rekeying data across departments. The bank positions this not as a chatbot experiment but as an auditable system that does repeatable work to a manager’s standard. The intent: faster cycle times, fewer errors and a smaller team focused on oversight, not paperwork.

For a new institution, credibility is earned through examination. Esh says the Bank of Israel has reviewed its architecture and controls, supplemented by assessments from independent third-party auditors. “The bar is as high as the largest banks in Israel,” Aloni said.

Esh’s go-to-market emphasizes outcomes customers can see. Fee-free accounts remove obvious friction, but the weekly payout is the headline feature. “Once a week the bank pays you,” Aloni said, describing a push notification that shows the amount credited from the 50/50 split, followed by a monthly summary of totals. The cadence is designed to turn a utility service into a habit and to build a feedback loop that traditional banks don’t offer.

Operationally, the payout rides on the same platform that runs deposits, transfers, lending, risk and financial reporting. Because the engine is integrated, the bank says it can calculate, distribute and audit the share-out without bolting on new systems. That coherency is central to the cost thesis: one stack to run the bank, one ledger of record for customers and supervisors.

Context, Not Caveat

Israel’s banking structure provides the backdrop, not the barrier, according to Aloni. A concentrated market may have dampened deposit competition, but it also sets a clear contrast for a model that centers on aligned incentives and transparent rules. Esh isn’t trying to win by offering a slightly higher posted rate this month. It’s trying to win by making the earnings split the product.

The software behind the bank is also a business. Esh and EOS operate as separate companies; EOS develops eOS and plans to sell the operating system to other financial institutions in Israel and abroad. The split is designed to accelerate innovation on both fronts. The bank acts as a real-world lab for features, and the software firm commercializes what works for a broader market. Leadership frames the automation as infrastructure — not an “AI-only bank” pitch — with humans setting policy and supervising system output.

The open questions are the ones any digital entrant faces. Can a challenger acquire customers at scale without overspending on incentives? Will the 50/50 rule be sticky enough to anchor primary relationships rather than small side balances? And as the rate environment changes, can Esh maintain attractive payouts while funding growth and absorbing credit costs? The company’s answer is to keep the rule simple, keep the stack tight and let the weekly notifications do the talking. If the messages keep arriving, Aloni is betting loyalty will follow.

“We think that the bank … can be a very good innovation laboratory, not only for equal sharing, but for many other things,” he told Webster. “We absolutely believe that finance will very soon become autonomous. And we intend to spearhead this process.”

PYMNTS CEO Karen Webster is one of the world’s leading experts in payments innovation and the digital economy, advising multinational companies and sitting on boards of emerging AI, healthtech and real-time payments firms. She founded PYMNTS.com in 2009, a top media platform covering innovation in payments, commerce and the digital economy. Webster is also the author of the NEXT newsletter and a co-founder of Market Platform Dynamics, specializing in driving and monetizing innovation across industries. 

Yuval Aloni is CEO of Esh Bank, an Israel-based, digital-only startup.