:salam2:
We can get the jewish perspective from sister shyhijabi. I want to give the quranic perspective to the same question. Here is my understanding of the issue (I am open for a discussion)
1. The term bani-israel clearly means the part of the progeny of Ibrahim from Ishaq and Yaqoob. Since Allah has announced a special law for the progeny of Ibrahim, they are addressed as a separate group in Quran. (By the special law, I mean Allah's covenant with Ibrahim and his progeny, which is mentioned in Quran as well as Bible). So Bani-Israel is a race and Quran addresses them as such for good reasons.
2. In the charge-sheet on Bani-Israel, discussed in detail in Surah Al-Baqarah, they are charged for not spreading the message in other nations and instead for accepting the polytheistic customs of others. In other words, they were given the responsibility to spread Allah's message on earth but they didn't perform their duty. That means, the real message of Judaism, which was in fact Islam, was never meant to remain in Bani-Israel only.
3. There are some exceptions to the rule. There have always been some jews, which were not bani-Israel but were converted to Judaism. Talking about the earliest days of the jewish history, bible speaks about "foreigners/strangers among you", which was a term for those jews (or let us call them "muslims" ), which were converted to Judaism in the earliest days. So we know from bible, that some non-bani-isrealis had even done exodus with Moses. Another example of converted jews are sephardic jews (If I am not mistaken.) So the idea of converted jews was never foreign to Judaism, although for most part, they have remained like a race and Quran charges them for that.
