Citibank announced this week that it will open an accelerator for financial startups in Israel. The bank is already heavily invested in the country, with a technology innovation center that opened in September 2011, and a data intelligence lab that opened in April 2013.

The accelerator will accept 5 to 10 companies for its opening course, which will last four months. The program will begin toward the end of 2013. Citibank will not take an equity stake in the accelerator companies.

But Citi’s new venture begs the question, Why would a New York-based bank travel halfway around the world to launch an accelerator, especially when that market has not necessarily produced a plethora of fintech companies in recent years?

Citibank is the first US bank to form an accelerator to nurture fintech startups in Israel. Citi joins large  multinationals tech companies like Google and Microsoft that have in the recent years set up accelerators in Israel to tap into the Israeli startup market.

Beginning in the early 1990s, Israel became a powerhouse in the tech world with successful companies such as Checkpoint, Amdocs and Nice. In June 2013, Google acquired the Israel-based Waze, the world’s leading social navigational application for a reported purchase price of around $1 billion. The country has also produced two fintech giants: Fundtech, which went public in 1998, and Actimize acquired by Nice in 2008.

One of the main reasons for the success of startups in Israel is that many of the entrepreneurs come from the military intelligence units where they learn technical and problem-solving skills.  With a population of a little over 8 million people , the quantity of startups launched each year per capita is among the highest in the world.  Laurence Berkowitz, a veteran of several Israeli startups who today works with local ventures to find funding, says that Israel is poised to lead in new fintech startups due to its expertise in  mobile, security, risk management and big data.

Citi’s new accelerator will bring  start ups to a level that can be funded by venture capital firms, such as one of the leading local funds, Carmel Ventures, which has spearheaded venture investing in the Israeli fintech space.

But Citi has already had a presence in Israel before this accelerator play. The data intelligence center the company started last March there plays an important role in Citi’s global operations. Its mission is to “analyze the world, capture as much flow as we can and use that both to advise our clients on what we think markets will do in the future and provide them with the liquidity to execute,” Citi’s head of local markets Anil Prasad said.