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ANNUAL REPORT 2013

Management Discussion And Analysis

8.0. Deployed Resources

8.1. Operations

In 2013 the Bank’s operations Management focused on improving operational efficiency and business development capabilities, while aiming at the best customer experience and healthy control levels. In that direction, the operations Management worked on 6 key lenses mentioned below, with the voice of the customer being the main driver:
  • Customer-centric Operating Model: the revamped operating model aiming at boosting business development through proactiveness and customer relationships started taking shape in 2013 through pilot branches.
    The new model releases front-liners from control and administrative work to better focus their effort into developing relationships and acquiring new customers. Therefore, new positions were created: personal bankers focused on business development, and customer management officers acted as gate keepers responsible for control and administrative work;
  • Performance Management: to improve performance, accountability and fact-based decisions, the Bank has enhanced its performance measurements through metrics such as the branches’ productivity, quality of service, customers waiting time, sales, audit scoring, etc.;
  • Process Efficiency and Automation: in an effort to improve process efficiency, control and turnaround time, the Bank has introduced a Document Management System through which all physical files will be turned into an electronic repository improving documents sharing and facilitating the archiving and process workflow;
  • Channels Convenience and Optimisation: to improve self-service capability and increase accessibility to banking services, the Bank continued its investment in technology and innovation by expanding its electronic hubs (Novo) in malls and commercial districts, and ATMs with cash and checks deposit functionality.
    Multiple initiatives were exerted in this regards to raise awareness on the use of electronic channels and incentives were set to encourage the migration from traditional banking channels to alternative channels such as ushers in branches and financial incentives on the use of ATMs;
  • People Skills Enrichment: 2013 was yet another year of remarkable investments in “People Soft” and technical skills through trainings and executive programs to develop leaders of the future;
  • Compliance Function Improvements: in an objective to maintain excellence in AML Compliance in alignment with international best practices, the Bank has made a big leap in 2013 through adopting the Risk-based approach in customer due diligence and operations monitoring. The Bank has also continued its constant effort of enhancing the Compliance framework, policies and procedures and the thorough compliance with local and International laws and regulations such as FATCA.

8.2. Information Technology

2013 is undoubtedly the year of “Visibility towards the Vision”. It can be viewed as another transitional year, as numerous advances in a number of areas make their marks with many projects going live and milestones achieved in the Bank’s strategic roadmap. The foundations laid in the previous 2 years formed solid grounds for IT to drive innovation and fuel business growth by catering for the business needs through technology and a more intelligent investment in the IT’s human capital. These efforts are not restricted to Bank Audi Lebanon; the vision is shared across entities in order to standardise the infrastructure and to enable the same levels of service quality across the Group. And in line with the vision set to transform the IT into a quality service provider, and thus making the department a business partner within the Bank, 2013 witnessed the announcement of reorganising the IT into 3 pillars: Design, Execution, and Operations.

In 2012 and within the scope of the transformation program, the IT department launched the “Service-oriented Architecture” (SOA) project where the various applications would connect and exchange functionalities through services, independently of platform and vendor. This project was intended to enable the replacement of the Bank’s legacy systems with up-to-date solutions and technologies. To achieve this goal, a robust middleware solution was implemented and went live in 2013. This solution has now become an integral part of the infrastructure, allowing all newly deployed applications to seamlessly connect to existing systems through web services. Continual enhancements and additional applications are being integrated in this architecture. This transformation program was initiated in some entities and will progressively be deployed in the remaining entities.

On a technical level, the IT department closed in 2013 the “Data Center Relocation” project that was announced in 2012, whereby the old data centre was moved within the headquarters to a new location equipped with state-of-the-art technology. Thanks to the efforts and planning of the IT team members, the relocation took place transparently for business users, with minimal to no disruptions to any of their operations. The same relocation exercise was done in Bank Audi Jordan.

Moreover, 2013 marked the closure of the “Disaster Recovery Site” and “Business Continuity Plan” project which was initiated in past years. This project provides a comprehensive high availability solution for the Bank’s critical systems to cater to business needs should the primary site become unavailable. A full functional rehearsal was carried out in the fourth quarter of 2013.

Another IT ambitious strategic project is “Infrastructure as a Service” aiming at taking the IT services to new levels of excellence. The implementation of such a solution heavily relies on the standardisation of the infrastructure, on virtualisation technologies, and on automation of tasks. The project was kick-started and procured in the third quarter of 2013, and phase 1 was completed in the fourth quarter of 2013. Phase 2 will be implemented in 2014, along with continuous investment for enhancements.

On the applications and business solutions level, 2013 witnessed the readiness to go live with a new Online Banking solution that addresses today’s demands of the Bank and allows serving the customers efficiently by catering to the needs of the growing number of technology-aware customers through capabilities that significantly improve their online experience. It also enables, among other things, a 360-degree view of the customers’ relationship with the Bank, and the potential of identifying new business opportunities. Phase 1 of the project went live and subsequent enhancements and functionalities are being implemented.

Another achievement was the implementation of a robust solution for document management, allowing enhanced archiving of all financial transactions documents, reconciliation between hard copies of documents and electronic archives, and the ability to abide by the Central Bank’s regulatory requirements related to document archiving.

Last but not least, an “Enterprise Resource Planning” system (a project that started in 2012) intends to become an enterprise-wide pivotal platform that will incorporate financial and risk management, Central Bank regulatory reporting, Human Resources management, asset and procurement management, to name only a few of its capabilities. In short, it will eventually act as a central information control system for the Bank and would play an intrinsic role in the strategic business decision-making process. Phase 1 of the project is in its final testing stages and is expected to go live by mid-2014.

But no innovation aiming at increasing service efficiency would be possible without the people leading it to success and the tools allowing them to do so. This is why the IT Management has embraced this concept and has given a high importance to investing in the IT’s human capital. Such an investment is divided into two main areas: the people and the tools.

Consequently, many software solutions have been acquired to enhance efficiency and increase visibility on work advancement and projects progress. Among such software are “Request Tracking” and “Incident and Change Management” solutions deployed according to worldwide acknowledged best practices with the preset goal of transforming IT into a top notch service provider. These solutions provide: a) better visibility on operational activities, b) the ability to identify and better address any issues or bottlenecks that could impact the service quality, and c) the tools and means to surpass the reactive approach to problem handling and to move into proactive control of the IT environment. For that, an IT Operations Control team was built in 2013 and is currently monitoring the Data Centre and all mission critical systems. The team’s scope is being progressively broadened and a comprehensive 24/7 monitoring and control capability is expected to be fully functional by the second quarter of 2014.

Another example of such solutions is an “Enterprise Project Management” software which provides greater visibility on demands, projects pipeline and projects under execution, resources management for efficient resources allocation and time planning.

As for trainings offered during 2013, they mainly focused on familiarising operations managers with industry-proven best practices in IT service management (ITIL), and training of infrastructure technical managers to the latest technologies in the industry. The whole package was reinforced with the implementation of processes to increase efficiency and effectiveness of services by minimising outages due to non-systematic changes on the IT environment by controlling any changes, along with their impact, on all other related components, by performing proper testing of any change prior to its deployment on the production environment, and by ensuring proper knowledge transfer from project teams to Operations team. Many of these processes were prepared and signed off during 2013, and became effective starting Q3. More processes are being written and will progressively be adopted in the IT department’s daily activities in the near future.

Moreover, with the increasing importance of information in today’s businesses, and the constantly growing threats of unauthorised access, 2013 witnessed the creation of a dedicated IT Security team. Its responsibilities primarily focus on ensuring the security and integrity of the Bank’s information assets through the deployment of advanced software for intrusion detection, access management and control, and the prevention against virus threats. It also closely follows up on the implementation of security processes and procedures. Moreover, the IT Security team performed many site visits to entities where security checks were performed, security conditions assessed and audited, and measures recommended in order to protect the entities against any potential security threats.

To wrap up, it is noteworthy to underline the IT department’s involvement in the Iraq project initiated in 2013 and falling under Bank Audi’s regional expansion strategy.

8.3. Human Resources

HR Developments

As a strategic partner at Bank Audi, the Human Resources department (HR) continues its transformation to facilitate the achievement of business objectives. Throughout 2013, distinguished accomplishments were witnessed in areas related to Recruitment and Selection, Training and Development, Relationship Management and Organisational Development.

Being a pioneer in the banking sector and continuously seeking innovative and effective approaches for our practices, Bank Audi launched the first Talent Assessment Centre (TAC) in Lebanon, an advanced assessment methodology seeking to select qualified candidates objectively. During 2013, the TAC was launched to assess both internal and external candidates who participated in structured exercises, interviews, group work and presentations, while 7 certified assessors from HR rated the level of each candidate in the required competencies and consequently compiled observations for individual assessments. The first session targeted graduates with outstanding records from prominent local universities. Out of 55 applicants, 5 candidates with the highest ratings were hired to follow a specialised training program with fast track career opportunities. The second session involved internal candidates as part of their career progression and development plan as potential branch managers. Accordingly, 56 employees were carefully selected and enrolled in the TAC, of which 27 qualified to enrol in the new designed Branch Managers Program.

2013 witnessed the launch of the “Oracle Human Capital Management” project aiming to serve as the sole reference for all HR-related data. 7 modules are to be implemented over the course of 2013 and 2014 covering all HR functions (Core HR, Performance Management, Learning Management, Time and Labour, I-Recruitment, Self-service and Payroll). The completion of the construction phase, as well as the project transition and production, are planned for 2014. During 2013, the following phases were completed:
  • Inception phase demonstrating the system to users to gather requirements;
  • Elaboration phase detailing the solution designs for review, validation and GAP analysis;
  • Data migration applied to ensure the proper continuity of the business workflow.

The “Competency Dictionary” was also developed during 2013 to cover core behavioural, generic/specific technical competencies, including their related indicators and the corresponding target seniority levels and/or functions.

Fully recognised for being a benchmark in the selection, motivation and growth of human capital, Bank Audi is committed to recruiting and retaining high-value individuals in all areas of the Bank. To that effect, Recruitment and Selection endeavours to sustain the Bank’s position as an employer of choice with 195 fresh graduates and experienced professionals recruited for different positions within the Bank. Additionally, 460 undergraduate/graduate students from prominent universities were welcomed at Bank Audi as part of the “Student Internship Program” in order for them to acquire knowledge on banking operations, while being exposed to the Bank’s corporate culture. As part of the yearly tradition, HR participated in a total of 7 job fairs, locally and internationally, in order to attract newly graduating students and increase the Bank’s visibility as a major job provider.

Moreover, aiming at attracting high potential graduates from prominent universities back to the Middle East to unleash their potential and contribute to the region’s growth, Bank Audi hosted a luncheon reception at its head office on December 23, 2013. This event brought together the Bank’s Senior Management, 43 Lebanese talents, employees and children of employees studying at prominent European and North American universities such as Harvard, Columbia, the University of Pennsylvania, London Business School and the London School of Economics and Political Science.

On a different level, the Relationship Management (RM) team continued to provide support to stakeholders in branches and head office departments through field visits and follow-ups. In 2013, a total of 145 employees were promoted and 342 were transferred within the Bank.

2013 was also characterised by the introduction of the “New Branch Operating Model” which aims at transforming the currently used operating model to become in-line with international trends and best practices. For that purpose, the RM team, in coordination with the Branch Network Management department, discussed with each branch manager and the concerned network manager the potential of all employees in order to be placed adequately within the new structure. The “New Operating Model” trainings were launched in 2013 to 5 selected branches, in different regions, to ensure a smooth transition.

In terms of learning and development, during 2013, the Training Academy witnessed the completion of 77 sessions offered to 500 registered employees, which presented them with the opportunity to advance in their careers. The Corporate Academy hosted 115 network managers, branch managers and assistant branch managers, providing them with macro level information about the milestones that are taking place at the global, regional and domestic levels.

Moreover, the Training and Development team, in collaboration with the Group Risk department, launched the Risk Training Program (Risk Academy). The program targets all risk employees at the Group level and interested employees from other functions. It consists of a series of internal courses intended to strengthen the awareness to risk management, foster the Bank’s risk culture, and provide a common and consistent learning approach to risk issues. During 2013, 17 related topics were successfully covered in training sessions delivered to 734 concerned employees using an e-learning platform.

Within the same scope, Bank Audi continued to provide significant trainings and promoting professional development to all its employees. Trainings covered technical and behavioural topics provided through training activities/coursework and development programs. Additionally, off-site retreats were conducted for various departments in order to enhance their teams’ dynamics and consolidate related visions and action plan.

In 2013, a total of 204,742 training hours and 178,684 on-the-job training hours were delivered to the Bank’s employees. 4 employees were enrolled in special training programs, including the “Individual Development Program“ and “Specialised Credit Training Program”. Training activities were intensively focused on academy courses and managerial and behavioural trainings:
  • 14 were granted sponsorships for higher education in local universities and 5 in international universities, such as: IE and HEC Paris;
  • 9 were selected to enrol in banking-related studies;
  • 36 applications were approved for specialised certifications and;
  • 2 completed their executive education programs at INSEAD and Harvard Business School.

TRAINING
In regards to the Central Bank’s regulations, employees continued to enrol in specific certifications related to regulatory banking functions. As a result, 447 employees became certified in the “Lebanese Financial Regulation” as at end-2013, thus maintaining the Bank’s position as the market leader in complying with BDL certification requirements.

The continuous efforts deployed by Human Resources constitute the metrics used to spread our vision and position ourselves as the market leaders, promoting effective change and development in support of the Bank’s strategy.