"Israeli high-tech is a miracle, and we must work hard to ensure that this miracle doesn't fall apart"
"Israeli high-tech is a miracle, and we must work hard to ensure that this miracle doesn't fall apart"
Rakefet Russak-Aminoach, former CEO of Bank Leumi, is now a Managing Partner at Team8, where she focuses on fintech. She believes in Israeli high-tech but is concerned about the impact of the ongoing war on the industry. "High-tech is a miracle. However, without a clear future outlook, foreign investors will not continue to invest indefinitely."
Although it has been about five years since Rakefet Russak-Aminoach left her role as CEO of Bank Leumi, adjusting to her presence in this new chapter in her life—the high-tech chapter—as a Managing Partner at fund Team8, still takes time.
Her presence in this new chapter is much more easygoing and relaxed, especially compared to her turbulent time at Bank Leumi, which required a more stern demeanor. "I hear that from people all the time," she says in an interview with Calcalist. "And indeed, being the CEO of Bank Leumi requires you to be made of iron. It reflects how I carry out my roles and my commitment to them, but it's not truly who I am."
While Russak-Aminoach now strictly maintains her identification with the high-tech sector, it's impossible to overlook her deep affection for banking in general—and for Bank Leumi in particular—also because she hasn't completely left the field. She also serves as a director at the U.S. bank BNY, in addition to being the chairwoman of Israeli chipmaker Hailo, a role in which she succeeded Zohar Zisapel before his passing.
Team8, founded ten years ago, is a venture capital fund operating in a unique format. It serves as an incubator for early-stage technology companies, and alongside investing, it supports them from their earliest phases, sometimes even before the entrepreneurs have an idea, all the way to an exit. It was founded by Nadav Zafrir, former commander of Unit 8200 and the incoming CEO of Check Point, alongside Liran Greenberg and Israel Grimberg. The fund, which has over $1 billion under management, invests in a variety of fields and has achieved ten exits to date, totaling about $2.5 billion, four of which occurred during the war: Cybersecurity companies Dig and Talon were sold to Palo Alto for around $1 billion, Gem Security was sold to Wiz for $350 million, and Planck was sold to Applied Systems for $300 million.
Team8's cyber activities, for which it is primarily known, were led by Zafrir. The vision that brought Russak-Aminach to Team8 was transforming it from a fund focused exclusively on cyber into a multidisciplinary group. Under her leadership, the first new area they ventured into was fintech, which she now leads alongside Ronen Assia, Alon Huri, and Galia Beer-Gabel. Since then, the fund has expanded into the fields of data and digital health as well.
You joined Team8 following a traumatic event: a cyberattack on Bank Leumi in 2014, which Zafrir helped you manage.
"Zafrir, together with other cyber professionals, discovered that the information leak came from Leumi Card, Bank Leumi's credit card company, rather than the bank itself. Ultimately, those who used the information and attempted to blackmail Bank Leumi were caught. I always try to explain the worst-case scenario—both for myself and for others—to help maintain calm. In this case, the worst-case scenario was catastrophic: the bank collapsing on my watch.
"You find yourself in a situation where, if the incident had been made public, you would have to explain to the people of Israel what was happening, and initially, you might not even know yourself. It could have sparked panic that might have caused the bank to collapse. But that's not what happened. What Nadav and I did together during that crisis was remarkable, but it could have easily ended differently. It taught me that nearly any difficult situation can be managed. Eventually, years later, my acquaintance with Zafrir led me to Team8."
This may be a different field, but isn't there a lot of pressure to prove yourself through exits?
"Today, we have over 35 companies. Some of them will not be sold through an exit. One of our companies, Claroty, will likely go public. In every field, you have to succeed constantly. Even in an institution like Bank Leumi, you're evaluated every quarter, and you're under fire from everyone. Either you've earned too much, making you a money-grabber, or you've earned too little, making you a poor manager. The pressure to succeed never ends, but I think it gets easier with age."
So far, your exits have been in cyber, not fintech.
"Obviously, because we started investing in cyber ten years ago and only began investing in fintech three years ago." Team8's fintech fund has already established four companies, and the fifth is in progress, though none have yet made an exit. "In addition, exits in the cybersecurity field happen much more quickly. In fintech, the timeline is different and can take up to ten years. But I think fintech is pioneering. I joined BNY Bank thanks to the digital transformation I led at Leumi, and that's what sparked their interest."
Last December, you raised half a billion dollars for three funds, making Team8 a large fund by Israeli standards. How did you manage to raise this money? Aren't investors steering clear of Israel because of the war?
"We raised a substantial amount from foreign investors until December 2023. In our next financing round, scheduled for 2025, we'll see where foreign investors stand. There's no doubt that the ongoing state of war is a cause for concern. We're living on borrowed time. Investors do give the Israeli high-tech industry a lot of credit for its resilience during the war and its ability to raise capital even as many people are drafted into the reserves, and I've certainly seen their amazement at how the ecosystem functions amid chaos. But if we liken the situation to the credit market, we're nearing our credit limit. It can't go on like this. Without a clear future outlook and stability, we too will find it difficult to raise another half a billion dollars."
Moody's recently downgraded Israel's credit rating by two notches at once because of the war and, as they put it, poor economic management by the current government. BIG's CEO called them audacious—"a bunch of bureaucrats and economists from who knows where." What's your take?
"Moody's economists need to assess the likelihood that Israel will repay its debts. Downgrading the rating by two notches may be an overreaction, but we aren't providing them with a clear outlook. We're not offering realistic plans for moving forward, so they can't hedge the event. There are ways to communicate that reassure rating agencies, but the discussions here did not reassure them. When a customer who owes a bank money is in a complex situation, he can present plans and arguments and convince the bank that he knows how to get out of it. Apparently, Moody's wasn't given satisfactory explanations. Without a clear outlook, it's hard to argue that their decision was unwarranted or audacious."
What kind of outlook can be offered during wartime?
"History shows that economic prosperity often follows wars and epidemics, partly due to the surge in deferred consumption, which is either fulfilled or even exceeded once the crisis subsides. But this war isn't a typical one—it's a prolonged war of attrition, and it's starting to feel like a constant reality. Most wars have a beginning and an end, but this time it's unclear when it will end. On top of this, we have a socially divided country, a massive deficit of over 160 billion shekels—which is a lenient calculation that doesn't include evacuation costs, damage to buildings, collateral damage, and the expected rise in the defense budget. The financing of this deficit is unclear, since refinancing the debt only makes it more costly, which gives us plenty of reasons for concern. The big picture isn't coming together."
Where does the high-tech sector's main challenge lie—with foreign or Israeli investors?
"By nature, Israeli high-tech isn't funded by local money; it relies on foreign investments. To a large extent, Israeli high-tech is a miracle, and we must work hard to ensure that this miracle doesn't fall apart. There are still investors in Israel, and deals are being made, but it's neither infinite nor guaranteed. As I said earlier, we're nearing our credit limit. Foreign investors can't be expected to continue pouring money in indefinitely under these conditions. We must also remember that high-tech is not a panacea. It is a crucial lifeline for the Israeli economy, contributing over 50% of Israel's exports, 20% of GDP, more than 10% of jobs, and over 30% of tax revenues, but it cannot carry the entire country on its own."
Since the judicial overhaul began, there has been increasing talk of a brain drain. Does that bother you?
"Very much so. I'm very Israeli and Zionist, and I believe there is no other place for us. The Jewish people cannot survive without the State of Israel, and it pains me to see every doctor who leaves. It hurts me like hearing someone say something bad about Bank Leumi back then. Israel is my home. We have no other home. My eldest daughter left a month ago to study at Stanford. She only just started her studies, and she's already advocating for Israel. I think it's great to live abroad for a while, but in the long term, I believe the best place to live is here. This is home."
Did the money that left Israel hurt the economy?
"I think the amount of money that left Israel was relatively negligible. That's not the problem. The problem is that we have an ongoing war with massive costs. Do you know how much a bomb costs? Extensive use over time generates astronomical expenses—billions upon billions." Russak-Aminoach, a CPA by training who also served as CEO of the accounting firm Somekh-Chaikin, is married to CPA Reem Aminoach, who formerly served as the financial advisor to the IDF's Chief of Staff, so she is no stranger to the costs of military equipment.
Pepper is not a shattered dream. It has more customers than Union Bank."
If you ask Russak-Aminoach, one of her greatest sources of pride from her time at Bank Leumi is the launch of the digital bank Pepper. She thought it would transform the Israeli banking landscape, believing it easier to build a digital bank from scratch than to change the DNA of an established institution. However, under the leadership of her successor, Hanan Friedman, Bank Leumi recently decided to merge Pepper into its existing infrastructure.
The brand continues to operate independently, and Russak-Aminoach dismisses the claim that Pepper is a failure, noting that it has fulfilled its mission of being the bank for millennials: "Pepper is an incredible customer recruitment engine—the best the bank could have imagined. It has more customers than Union Bank. It appeals to young customers, the millennial generation. My daughters are also with Pepper. Pepper offers young people a significant value proposition: doing everything via a mobile app, with no fees. From this perspective, it's exactly what we wanted, and it serves as a recruitment engine for the bank."
Isn't the infrastructural merger into Leumi a shattered dream?
"Absolutely not. It's about building Pepper for the millennial generation. Pepper won't lose any of its existing capabilities or be forced onto outdated systems that would set it back. In the end, it's logical for Bank Leumi not to maintain two separate core systems over time. Ultimately, a choice had to be made. Anyone claiming Pepper is a shattered dream is someone from a competing bank. It's like when I was accused of rushing to settle the case with the U.S. authorities. Those same critics eventually made similar deals—at triple the cost. It's the same with Pepper."
Russak-Aminoach is referring to Leumi's involvement in the affair where Israeli banks were accused by U.S. authorities of helping U.S. customers evade taxes through their international branches. Leumi settled the matter by paying a fine of about $400 million, being the first to close the affair in 2017. Bank Hapoalim settled in 2020 with a $900 million fine.
Do you feel content with how the affair was resolved with the Americans?
"Absolutely. It was the lowest price paid by an Israeli bank, thanks to our quick response. We immediately acknowledged the issue. We didn't deny it or argue; we provided the Americans with all the information and cooperated fully. Other banks have tried to portray our actions differently, but as with Pepper, I hate to say it—they're just envious."
Last month, the Supervisor of Banks issued an unusual directive to regulated entities, requiring banks to create a plan to divert customers' funds from checking accounts to deposits, making them more appealing in order to allow customers to benefit from the high market interest rates. This directive suggests that the Bank of Israel believes banks are being unfair by fully transferring interest rate hikes to the credit they provide, without doing the same for deposits.
If you were still the CEO, how would you handle this issue?
"Banks need to be fair. On the one hand, they need to be strong and profitable to justify their existence, but on the other, they must give back to society. What was my approach? Establishing Pepper. Everything we invested in digital transformation ultimately benefited customers. During my tenure, interest rates were zero, yet there was still resentment towards banks. I should know (referring to protests outside her home and her daughters' school, DBN). People don't like banks, period. But you have to look at the bigger picture, and the necessary balance can be managed in various ways."
So we're back to Pepper. You said before, including to Nir Zuk on your podcast, that for a digital bank to succeed, it needs millions of customers. Is that the Achilles' heel for the bank Zuk is trying to establish and for One Zero?
"I'm always very direct. Nir is great, and we connected through the interview, but I told him what I've been saying for years—that, unfortunately, it won't last. Establishing a bank, even a digital one, is so expensive and complicated that I don't see how the venture can sustain itself. It requires substantial investment, and to break even, it would need millions of customers. Israel is a small country. As a customer recruitment engine for an established bank, it could work—that's a different story."
That's unfortunate, as it could have been a Robin Hood-like alternative to the big banks.
"There's already Pepper, which is the same thing. Why should it matter if it's owned by Leumi? There's no difference between Pepper and One Zero, so why is Pepper considered a disappointment while One Zero is seen as a Robin Hood? Pepper is the real Robin Hood. It was first to market, and the fact that One Zero is independent makes no difference. As a customer, you get the same thing from both, and with Pepper, you pay nothing. Instead of giving credit, they throw tomatoes."
Could acquiring Pepper from Leumi turn one of the digital banks into a genuine alternative to the established banks?
"Yes, but the question is whether anyone would be willing to pay enough, considering the significant investment it required."
Russak-Aminoach stepped down from her role as CEO of Leumi after a tumultuous 7.5-year tenure. Her time included not only resolving the aid to tax evasion case with the U.S. authorities, but also an aggressive streamlining process that reduced the workforce from 14,000 to 9,000, branch closures, and a controversial photo of her drinking Diet Coke with Nochi Dankner at the upscale restaurant Seatara, which sparked the "Coming for the Bankers" movement against her, over what was perceived as favorable treatment of tycoons. One of the highlights of her tenure was her fight against the law limiting senior executives' salaries, which capped bank CEO salaries at 3.5 million shekels annually.
Is that why you left Leumi?
"Absolutely not. From day one, I said I was coming in for 5-7 years. In my opinion, that law is very damaging to the system, and whoever amends it will be doing a great service. It makes no sense to determine, by law, that managers in the financial sector—which is full of large, complex organizations—should be paid half of what managers of much smaller companies earn. It's a problem, and I say that now without any personal interest. You can't expect the same quality; it simply doesn't work." Despite Russak-Aminoach's assertion, since the law took effect, all bank CEOs have been replaced, sometimes more than once, yet financial results and market values have continued to break records.
Okay, so that's not why you left Leumi, but didn't it affect you, even in terms of morale?
"I was so driven and my love for the bank was so great that it didn't influence my decision on when to step down. It wasn't pleasant, but while I was in the role, it made no difference. I was so passionate about the bank that people were shocked I left at all. When my driver at the bank asked me why I was leaving now, when everything was going well and Leumi was the biggest bank, I told him, 'Uri, now of all times! When else should I leave—when there are problems?'"
Zafrir is about to become the CEO of Check Point. Will he be able to fill Gil Shwed's shoes and also compete with Palo Alto, the world's largest cybersecurity company, founded by Zuk, who came from Check Point?
"Nadav understands cybersecurity from every angle. The fact that he's leaving for Check Point while we continue to build great companies is a badge of honor for him. A good manager knows how to build an enterprise that operates well without him. A good manager can go to the beach and have everything function smoothly. If he can't, he's not a good manager. It's a philosophy. He's there to build a management team, an orchestra that plays together, resolve crises, and seize opportunities—that's it. If he's needed for more than that, he's not a good manager. Nir is very Israeli; he's one of us. He provides generous financial support, but Palo Alto is an American company, and Check Point is ours—an Israeli company—so we want it to succeed."
Do you think it makes sense that today no bank has a female CEO? In your time, three banks were headed by women.
"Back then, I believed having three female CEOs was merely coincidental. Now, I think that having one female CEO can create a supportive environment for others to follow, and that there might be aspects of this role that are particularly well-suited to women. Keep in mind that women often bear the brunt of managing both home and work, even though it doesn't work for everyone and takes a heavy toll, because as a mother, who is irreplaceable, there are certain things you have to delegate. The fact that no banks today have female CEOs doesn't mean there aren't other examples of strong women. When I was younger, I keenly sought a role model, and I always said I drew inspiration from three women—Galia Maor, who was also the CEO of Bank Leumi; Dorit Beinisch, the 9th president of the Supreme Court of Israel; and Miriam Ben-Porat, a Supreme Court justice. But today, there are plenty of examples. Look at Esther Hayut or Gali Baharav-Miara—she's amazing, brave, honest, decent, and unafraid."
Russak-Aminoach, 58, lives in Ramat Hasharon and has two daughters. She holds a BA in Accounting and Economics, an LL.B., and an MBA in Finance and Insurance from Tel Aviv University. She conquered several peaks at a young age: at 34, she became the CEO of Somekh-Chaikin, and at 46, she was appointed CEO of Bank Leumi, having previously served as Head of the Corporate Division, Chief Credit Officer, and the youngest member of the bank's management in its history.
What shaped you and drove you to pursue such a demanding career?
"My father was a very diligent accountant who always worked until our weekly Shabbat dinner. He has had a tremendous influence on me, for better or for worse. When I got a 99 on a test, he would ask me where the missing point was. When I got a 100, he asked how many other students had scored the same. He instilled in me the urge to step out of my comfort zone, even when I was CEO of Bank Leumi."
And professionally?
"Gad Somekh. When I became a partner at Somekh-Chaikin, I once accompanied him to a meeting with a major client who wanted us to sign a report that would legitimize something illegitimate. I was young then, maybe 30 years old, and I wondered how he would handle it. Somekh got up and told the client, 'It's a free country, there are plenty of accountants—take whoever you want; we won't sign it,' and walked out. I was left breathless. Later, as Chief Credit Officer of Bank Leumi in 2008 during the height of the global crisis, I remember a very tough conversation with a client who threatened to move all his assets out of the bank. I opened the door and said, 'Go ahead.' When he left and the door closed, I burst into tears. I called Gad afterward and told him that if I hadn't learned from him, I wouldn't have been able to do it."
Why did you cry?
"When you're a young woman standing in front of one of the wealthiest, most powerful people in Israel and he's threatening you, it's a form of violence, even if not physical, and it was very hard for me. I was 40 at the time, responsible for billions of shekels in credit management, and in 2008, suddenly all the market giants were coming to me, pleading in my office. I had worked with them for years, and now they desperately needed money. My job, however, was to provide funds only if I believed the bank would be repaid, and if it was good for the bank. You see suffering and vulnerability, and you want to help, but you can't always do that, and sometimes it escalated into threats."
This subject brings to mind the infamous photo of her drinking Diet Coke at the upscale restaurant Seatara with Nochi Dankner, who once called Leumi "the bank of the girls who don't give credit." In the end, the bank indeed had to write off part of Dankner's debt in a settlement. According to Russak-Aminoach: "Even over a Diet Coke, we had a difficult conversation. It's part of life, part of the job. During that period, I also met with Lev Leviev and Yitzhak Tshuva. I met Nochi halfway—between my office and his home. We met at Seatara, and that photo was taken out of context. I only did what was best for the bank. There was no culture of generous credit during my tenure, and I was not considered a favorite of the tycoons. The goal was to do the job right and to structure the appropriate credit transactions for the bank, so that the bank would get its money back."
