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ANNUAL REPORT 2014

Management Discussion And Analysis

7.0. Deployed Resources

7.1. Operations

With a strategic focus on delivering exceptional client experience and a high operational efficiency, the Bank’s objective is to deliver a world class service quality and products, and to lead innovation and digitisation in market. In this direction, the Bank has launched a comprehensive “Lean Transformation” across all aspects of the Bank’s operating model which combines customer centricity with operational efficiency. This is a long-term transformation that will be deployed in phases with a continuous improvement aspect driving it. Below is a list of achievements completed throughout the year 2014 per topic.

Channels Innovations and Digitisation

New Online Banking

Clients’ behaviour and needs are changing and are moving more and more towards self-service and online banking. In response to this trend, the Bank has launched a new online banking solution aiming to enhance its image as a leader in providing online banking services through the deployment of leading technologies. The new online banking has a new set of services (such as external transfers, standing orders, bulk payments and others) and an improved user experience in terms of navigation, features and personalisation (naming the accounts, creating templates).

New e-Branch

The Bank launched its latest banking landmark, the “Novo e-branch”, in Beirut Central District. The branch opens 7 days a week from 10:00 am till 10:00 pm, and offers a convenient and user-friendly banking experience through interactive channels and features providing the below channels:
  • Novo ATM and regular ATM.
  • New Interactive Teller Machines (ITMs), for the first time in Lebanon, handling almost all counter operations through video banking.
  • Advisory room.
  • Information station.
  • Card Artist station.
  • The “Cards to Go” prepaid card vending machine.

Through this new branch format, customers have unlimited access to financial advice via video conferencing with bank officers. They can also perform transactions and open accounts, as well as apply for cards and loans, among other services. A special waiting area boasting an interactive table has been made available for customers to access the latest news, play games and connect to social media platforms. Bank Audi has also set up a huge video wall where ads, clips and animations are displayed.

A Performance Management System with Direct Impact on Customer Experience

An improved Performance Management System is implemented in all the branches geared towards improving client experience, boosting performance and fostering communication and team work. Below is an overview on the components:
  • New branch KPIs and scorecard – with direct impact on the client experiences and operational efficiency. For example:
    • Improving quality of service in branches based on clients’ quality feedback.
    • Reducing clients’ waiting time in branches.
    • Increasing clients’ cross ratio.
    • Increasing the number of operations that can be handled by an employee, thus leading to faster operations.
  • A new interactive digital dashboard reporting a 360 view to branches’ dashboard: using the Leading Business intelligence Technology, branches’ staff now have clear visibility of the overall branch performance in a digital and easy-to-use application.
  • Branch performance meetings: a standard meeting mechanism is implemented across the network using whiteboard in every branch. This tool helped improve communication between Management and branch staff, and boost the performance through clear, objective, tactical plans and a continuous improvement culture.

Automating Operations for Better Efficiency and Control

A new Document Management System (DMS) – The Bank has introduced a modern enterprise wide document management platform that allows the archiving of key documentation for indefinite periods of time in soft copy, thus increasing security and control, creating a paperless environment, and supporting the automation and streamlining of processes.

A new loan origination platform (Bluering) – A new lending platform was introduced to support loan origination cycles. This tool will help improve customer experience through faster turnaround time, as well as enhance operational efficiency through automating, streamlining, tracking and standardising the loan origination processes across the Bank.

Customer Centricity and Operational Efficiency

This trend of moving towards online channels and ATMs is helping in reducing non-value added activities in the branch, therefore enabling the staff to provide more advisory and personalised servicing to the customers. This is a long journey that started by segmenting customers to provide the most suitable products and services. In parallel, the Bank carried on its initiated streamlining and reengineering process across branches, aiming at speeding operations and enhancing staff utilisation efficiency, supported by scientific staffing calculations ensuring proper staffing level in branches. In addition, a new branch look and feel was introduced in 2014 that touches on the external and internal design of the branch and addresses new clients’ behaviour and needs.

Learning and Development

The improvement in staff behaviour and skills was a key component of Lean Transformation, whereby the staff was trained on the improved Performance Management System and on communicating and leading the branch staff toward better performance though classroom and on the ground process confirmation mechanism.

This was complemented by the ongoing technical and soft skills training academy for new joiners and current employees looking for career growth.

7.2. Information Technology

The year 2014 marked the successful closure of multiple transformational business projects for Bank Audi’s IT.

A new online banking solution was made available to all the Bank’s customers. This solution allows serving customers efficiently by catering to the needs of the growing number of technology-aware customers through capabilities that significantly improve their online experience and enables, among other things, a 360 degree view of customers’ relationship with the Bank.

Phase 2 of this project was also immediately triggered and is expected to go live in late 2015. This phase will enhance the online banking experience and expand the offered features, especially for corporate customers. It will also launch the new Bank Audi Mobile Banking application.

The ”IFRMS” project, Integrated Finance and Risk Management System, jointly owned by the Finance and Risk departments, that aims to provide a central repository for Finance and Risk reporting and management, in addition to the Bank’s procurement cycle from initiation till payment with projects and assets management, went live in July 2014. Phase 2 of the project includes implementing analytical applications for Asset Liability Management (ALM), Profitability and Funds Transfer Pricing (FTP) was kicked in August 2014 and expected to go live in phases starting late 2015 till mid 2016.

Phase 1 of the new Enterprise Resource Planning system also went live in 2014, covering financial management, Central Bank regulatory reporting, and asset and procurement management. Phase 2 of this project was also started and will cover risk management, profitability and human resources management to name a few. Eventually, this system will be the central information control portal for the Bank and will play an intrinsic role in the strategic business decision-making process.

In addition, many other business solutions projects were successfully concluded and launched, including a new loan initiation system. All these systems were implemented leveraging Bank Audi IT’s strategy of service-based architecture, with the Enterprise Service Bus being at the core of the environment, orchestrating and integrating the different systems together.

From the infrastructure and technology side, Bank Audi’s IT continued the strategic journey started in 2012 towards a Software-Defined Data Centre (SDDC) which makes all elements of the infrastructure – compute, networking, storage and security – provisioned, operated and managed through software and automation, and delivered as a service.

After achieving “Infrastructure-as-a-service” in 2013, replication and failover/failback activities to and from the disaster recovery site have been streamlined and automated. Work on “Platform-as-a-service” has begun, expected to be completed in 2015. The IT team also started evaluating and testing leading-edge technologies such as Network Virtualisation, Software-Defined Networks, and Security-as-a-service.

From our beliefs that mobility empowers the workforce and enhances customer service quality by bringing productivity on the go to Bank’s staff, Bank Audi’s IT implemented an Enterprise Mobility Management (EMM) solution in mid 2014. The EMM solution delivers a secure, flexible, scalable and enterprise-ready platform that makes email, collaboration, documents and business applications securely available on any mobile device or tablet. Employees can now confidently use and process corporate information in mobile workflows on bring-your-own or company-owned devices, knowing that the enterprise’s data is always protected.

2014 also witnessed the completion of the Bank’s new Tier 4 data centre, the first in Lebanon. This new data centre will support mission critical Information Technology infrastructure and maintain business continuity. It was certified by the Uptime Institute in mid-2014 and the Bank is planning to use it as a secondary site for most of its international entities.

Last but not least, as cyber-security attacks and advanced persistent threats become more sophisticated and use better technologies to bypass traditional security controls, the Bank opted for a new proactive security approach using Big Data Security Analytics. Implemented in the beginning of 2014, the new Intelligence-driven security system, fuelled by big data analytics, helps the Bank proactively detect suspicious security events and deter cyber-attacks at early stages. The system’s intelligence capabilities include improved threat analysis and trending mechanisms, advanced automated responses, and real-time smart alerts.

7.3. Human Resources

HR Developments

The year 2014 was concluded with various successful accomplishments for the Human Resources department (HR) around areas of Recruitment and Selection, Training and Development, Relationship Management and Organisational Development.

Bank Audi continued to own up to its position as the largest employer in the Lebanese private sector at large and the most significant contributor to job creation in Lebanon. It has the most advanced recruitment processes fully recognised in Lebanon and the region for being a benchmark in the selection strategy with a comprehensive talent attraction strategy, drawing from a pool of global/regional talent with prime educational backgrounds from Ivy Leagues such as Harvard and Columbia and from other prominent business schools such as INSEAD and London Business School.

Since the Bank recognises the importance of continuously enhancing its selection process, both the Talent Assessment Centre and the Branch Management Assessment Centre (BMAC) were revisited, allowing an even better selective choice of internal and external candidates. Subsequently, the implementation of the BMAC during 2013 took place as follows: 91 internal candidates from branches and head office departments were targeted based on a set of pre-defined criteria including the feedback of HR and concerned managers; 56 shortlisted candidates were accordingly selected to sit for the Assessment Centre (AC) phase.

The Recruitment and Selection efforts for 2014 resulted in the engagement of 234 new employees from diverse backgrounds for different positions within the Bank. In addition, the “Student Internship Program” welcomed 431 undergraduate/graduate students from prominent universities, offering them the opportunity to gain knowledge about banking operations and a general understanding of the Bank’s corporate culture.

Priding itself for dedicating one of the highest budgets in Lebanon for Training and Development (T&D) activities, the Bank kept on providing the widest learning opportunities and sponsorships granted to high-potential employees aiming to pursue graduate education both locally and overseas.

Bank Audi carried on with delivering valuable trainings and unparalleled learning and development opportunities to its human capital. With its prime T&D activities and exceptional talent management programs, the Bank delivered a total of 180,326 training hours and 229,047 on-the-job training hours during 2014.

Training activities were intensively focusing on academy courses and managerial and behavioural trainings:

HR Developments

Armed with a highly qualified T&D team, the majority of behavioural trainings were delivered internally.

Within the context of the Training Academy, unique in its kind in Lebanon and launched in 2012 with the aim to transform employees into highly qualified bankers, 136 sessions covering specialised technical/behavioural courses were offered to 600 registered employees, allowing them to advance in their careers. Within the same scope, the Corporate Academy hosted 101 network managers, branch managers and assistant branch managers, providing them with macro level information about milestones taking place at the global, regional and domestic levels.

In addition, Bank Audi launched the first “Advanced Management Program” (AMP) in collaboration with the American University of Beirut. AMP is a thirty-day executive education program customised to integrate the Bank’s organisational development objectives with the personal development of its middle managers. It equipped the first cohort of 20 participants who successfully completed the program at year-end, with contextual know-how and a way of thinking to be active contributors to the Bank’s key pillars of success: innovation, customer centricity, quality, people development and social responsibility.

Within the context of the Risk Training Program (Risk Academy) launched in 2013, 12 topics were successfully covered in training sessions delivered to 400 concerned employees at the Group level during 2014. Significant trainings covering technical – related to banking, legal, AML and fraud – and behavioural topics were provided to head office and branch employees through training activities/coursework and development programs. Off-site retreats aiming at improving team dynamics while consolidating related visions and action plans were conducted by the T&D team for several departments and branches.

On another note and living up to its belief that learning is a way of life as it is embedded in its culture, motivating employees through continuous growth, learning and development is of high significance to the Bank. For that, Bank Audi sponsored 59 employees to further pursue their higher-level education:

The Relationship Management team continued to provide support to stakeholders in branches and head office departments through field visits and follow-ups. A total of 238 promotions and 290 transfers took place throughout 2014.

Emphasising the importance of communication and transparency, the HR team delivered ”Ask Your HR” sessions to network and branch managers. The aim was to get in touch with the front line and truly listen to the concerns of branch employees, while discussing the latest HR goals and current projects and assessing solutions, exploring needs, and disclosing future action plans.

As a continuation to the new Branch Operating Model project, HR assisted, during 2014, in its implementation in 6 additional branches in different regions, allowing them to comply with international trends and best practices. For that, specialised training topics were accordingly delivered to all 78 participants in order to ensure a smooth transition from the previous operating model.

Aiming at evolving into a more tech-based profession and ensuring consultative partnership with stakeholders and greater efficiency in service delivery, HR focused in 2014 on the implementation of the “Oracle Human Resource Management System”. While the project transition and production are planned for 2015, the following phases were completed in 2014:
  • Construction phase and quality assurance testing of 5 modules: Core HR, Performance Management, Learning Management, I-Recruitment and Self–service.
  • Elaboration phase of 2 modules (Payroll, Time and Labour) detailing the solution designs for review and GAP analysis.
  • Data migration applied to ensure the proper continuity of the business workflow.
  • Development of a high-level Integration design between the payroll process and other systems, namely core banking.

The ”Library of Objectives” project was also developed during 2014, covering all the functions at the Bank, as part of the “Performance Management” module to be implemented on the Oracle Human Resource Management System. The purpose of having such a library is to make it easier for managers to select objectives and, accordingly, assign appropriate measures (related to time, percentages, amounts, etc.) for team members on an individual basis.

The Human Resources department continuously strives to remain the Bank’s strategic partner, recognised for being a benchmark in the selection, motivation and growth of its human capital.