Opinion
Israel leads in cybersecurity innovation but lags in regulation—this must change
While the U.S. and Europe tighten financial cyber rules, Israel’s outdated regulations leave its institutions exposed.
The recent $2 million fine imposed on PayPal in New York serves as a clear warning sign: U.S. regulators are tightening enforcement in cybersecurity. Meanwhile, in Europe, the DORA regulation has come into effect, setting a new standard for security requirements for financial institutions. However, while the world moves forward, Israel - despite being the "Cyber Nation" - is experiencing a concerning lag.
New research reveals that 43% of financial institutions in Britain still don't comply with DORA requirements, despite a two-year preparation period. In Israel, the situation is even more complex: local regulation significantly lags behind the West, and financial institutions suffer from a lack of basic transparency regarding their IT infrastructure.
From my field experience, this regulatory gap creates a paradoxical situation: while Israeli cybersecurity companies lead in developing advanced security solutions for the global market, the local market remains behind. Many Israeli organizations struggle with mapping and managing their digital assets - a basic requirement for compliance with regulations like DORA.
The problem isn't just regulatory. There's a cultural gap in the approach to information security: while Europe and the U.S. treat cyber as a material business risk, in Israel it's still sometimes viewed as "just" a technological issue. This is reflected in budgets, management attention, and most importantly - infrastructure quality.
The current situation demands rapid change. Israeli companies operating in international markets must adapt to global standards, regardless of the local regulatory environment. Beyond that, an awakening of Israeli regulators is needed. The great opportunity lies in the ability to learn from European and American experience and build an advanced regulatory framework that suits local reality.
If we don't act quickly, the gap will widen. The world won't wait for us, and the risks - both business and security - will only intensify. It's time for Israel to become a leader not only in developing cybersecurity technologies but also in their implementation in the local market.
The author is a co-founder of Faddom.
