Bank of Israel requires banks to provide information on consumers behavior

The Bank of Israel is on its way to becoming the "big brother" of Israeli citizens: it requires banks and credit card companies to provide it with comprehensive information on the consumer behavior of their customers, which it will centralize in a special database. The database will centralize the expenditure on each citizen's credit cards, the use he made of checks and the amount of cash he withdrew and how he conducted himself with the "grant per citizen" he received.
In a letter sent by the Governor's Chief of Staff, Dr. Golan Benita, to the banks and credit card companies, he demanded that the information be returned seven years later. Five years back.
Benita's instructions stated that the report should include:
Expenditure on credit cards segmented by activity segment: The Bank of Israel explained that the main part of private consumption in Israel is based on the use of debit cards. "The required time span of seven years is required for the purpose of making a seasonal adjustment and creating a 'forecast line' according to which the expenses would have behaved had it not been for exceptional events." The bank's intention is to know how much money consumers have spent on pharmacies, education and leisure, food chains, electricity, clothing, furniture, tourism (travel agencies, airports), restaurants, fuel and transportation, among others.
Use of checks and cash withdrawals from vending machines: "Only one or two of the existing three payment methods (checks, cash, and credit cards) can be examined due to the risk of substitution between the various means of payment, "In addition, in order to examine trends in the payments market, an individual examination ('line level') is required in order to characterize the change over time, its causes, and to try and create a future forecasting model."
The amount of the grant per citizen: "This figure is needed to measure the change in private expenditure in relation to a change in income, in the context of the crisis, the change in income is the amount of the grant - therefore it is important to 'paint' the income as a result of the grant and not for other reasons."
This is a large amount of information that the banks and credit card companies will provide to the Bank of Israel. Once the Bank of Israel receives the information, it will cross-reference the data, and each consumer will be characterized by his or her consumer behavior with a unique identification number that the Bank of Israel will generate based on the citizen's identity number.
The Bank of Israel explained that as soon as the characterization from any source is received, the information will be innocuous (procedure for removing identifying information): the name will be deleted and the ID number will be replaced with the unique ID number generated by the bank. Nonetheless, privacy and information security experts warn that there is no difficulty in re-identifying such sensitive information, and identifying the citizen to whom it belongs.
The Bank of Israel explained that after the characterization is obtained from all the sources regarding the customer - his ID number will be deleted quickly. However, it is still unclear how long the ID number will be attached to this information until it is deleted. So the information may leak before the ID number is deleted. According to security sources, "there is no difficulty in re-identifying such sensitive information."
The concentration of information on the use of checks and cash withdrawals by citizens also provokes much criticism in light of the fact that here, too, the Bank of Israel will be able to trace the customer's behavior and characteristics years back.
Banks and credit card companies are required to transfer the information by mid-December 2021 i.e. another 4 and a half months. Benita's letter states that "the data will be kept under a high level of confidentiality, at a maximum level of security and access to it will be limited." It was also stated that "the Bank of Israel Law authorizes the Governor of the Bank of Israel with the approval of the Monetary Committee to stipulate in the order reporting obligations to financial entities in order to achieve its objectives and perform its functions." "On a daily basis."
The Bank of Israel emphasized that it is "aware of the burden on reporters and will work to assist all reporters in completing the task on time. The best. We also ask that you take care of the allocation of the appropriate resources for the purpose of reporting to the database. " Banks and credit card companies have been offered to arrange a virtual meeting for further explanations.
The Bank of Israel then explained that the corona crisis reinforced the need for detailed data required for support and decision-making regarding policy measures, inter alia, regarding the area of ​​credit granted to the business sector.
The Bank of Israel stated in response that "it is important to emphasize that the database itself will not apply any identification mark, ID number, account number, etc., these will be deleted immediately after receiving the data and their use for interrogating the database will be adjusted. They are necessary for initial acceptance in order to build it from several sources of information, and this is not an ongoing report. Also, after extracting the economic insights from the database - it will be deleted and not stored in the Bank of Israel. The collection of data from the banking system is done in accordance with the Bank of Israel Law, similar to other reports received on a regular basis. The above report was conducted with the highest and most stringent standards of privacy, as was done in practice in the credit database that exists at the Bank and has been operating since 2019.
"Regarding the purpose of the database, the Bank of Israel sees great value in making informed, correct and more accurate decisions using large databases (BIG DATA). The need for such a database analysis is related to a number of issues that are at the core of the Bank of Israel." For example, as an economic adviser to the government, the Bank seeks to examine the effectiveness of the government assistance program during the Corona crisis, the impact of restrictions on the economy and the various populations. Basic financial and improve their financial situation.