Amdocs (NYSE: DOX) has applied to the Supervisor of Banks at the Bank of Israel for a permit to open an Internet bank in Israel, together with a group of private investors.

The bank would be entirely software-based and take its computer and communications systems from Amdocs, which specializes in billing software. In recent years Amdocs has been expanding into the financial sector too.

At this stage, it isn't clear whether Amdocs would own the virtual bank, but it is assumed that the firm will link itself to a group of investors, partly because of the large investments that the endeavor would require.

The group of investors includes a number of leading figures in the financial world.

One is Yehoshua Agassi, one of the founders of Direct Insurance (TASE: DIFI) - which led to the revolution of direct insurance policies in the Israeli market. Until 1998, Agassi was the CEO of Direct Insurance.

The main advantage of an Internet bank would be its ability to compete without investing enormous sums in establishing physical branches.

Estimates are that such a bank could lower fees and interest rates by tens of percent compared to the rates offered by the existing banks.

The investment group had approached the previous supervisor, Yoav Lehman, on the matter of the Internet bank a few months ago, but was given the cold shoulder. However, with the entry of a new supervisor, Rony Hizkiyahu, the group decided to try again and ask the Bank of Israel for permission to open the online bank.

The request is now sitting on Hizkiyahu's desk, and if the supervisor finds it appropriate, the matter will then be sent for consideration by Governor Stanley Fischer.

TheMarker has learned that Fischer supports establishing an Internet bank in Israel, based on models that already exist elsewhere in the world.

Nevertheless, the central bank will not compromise on its minimal demands from the investors: a certificate of good conduct for each of the partners, full disclosure of all their additional business holdings, and a commitment to invest a minimal amount of their own equity in the bank.

Amdocs meanwhile denied all. "The company is not connected with any group of investors concerning the establishment of an Internet bank in Israel. Amdocs itself does not operate, and does not intend to operate in the banking sector. The company does not know of any such request, and if the company's name has recently been brought into the matter, then it is without permission."

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