2. Mohammad Fheili â fheilim@jtbbank.comÂ
Mohammad FheiliÂ
âOver 30 years of Experience in Banking.Â
mifheili@gmail.com (961)Â 3Â 337175Â Â
ďź Risk & Capacity Building Specialist.
ďź Trainer in Risk & Compliance
ďź University Lecturer: Economics, Risk, and Banking
Operations
ďź Currently serves in the capacity of an Executive (AGM) at
JTB Bank in Lebanon.
ďź Served as:
⢠An Economist at ABL,
⢠Senior Manager at BankMed
⢠Senior Manager & Chief Risk Officer at Group
Fransabank
ďź Mohammad received his college education
(undergraduate & graduate) at Louisiana State University
(LSU), and has been teaching Economics and Finance for
over 25 continuous years at reputable universities in the
USA (LSU) and Lebanon (LAU).
ďź Finally, Mohammad published over 25 articles, of those
many are in refereed Journals (e.g., Journal of Money
Laundering & Control; Journal of Operational Risk;
Journal of Law & Economics; etc.) and Bulletins.â
4. Mohammad Fheili â fheilim@jtbbank.comÂ
However,
⢠Increased Competition
⢠Advent of Technology
⢠Proliferation of Channels to service the Customer
have led to:
⢠Increased Usage of Impersonal Electronic Services: Low Cost Electronic Services;
Widespread and Diffused Customer Base. This, in turn led to:
ďź Lower Customer Intimacy (How much intimacy can one get out of eâBanking!).
ďź Reduced Switching Costs Between Different Banks (Customers these days are constantly
shopping for the better deal).
ďź Increased Chances of Fraud and Credit Risk (Law 318 on Fraud & BDL Basic Circulars 83 â
Regulatorâs Version of Law 318, and BDL Intermediate Circular 371 â Compliance Officer at POS, and BDL
Basic Circular 81 on Credit Risk â Compared to BDL Basic Circular 58)
ďź Increased the Demand for Transparency (BDL Basic Circular 134; and BCCL Circular 281)
⢠Less Time to Know and Influence Customers.
ďź Research shows that Customer Interest peaks and falls rapidly especially in
response to a Promotional Event.
ďź This makes it absolutely necessary for banks to optimally leverage all available
customer touch points so as to be able to influence the customer (e.g., You find ads and
offers on ATM receipts).
TheTruthAboutRetail Banking
7. Mohammad Fheili â fheilim@jtbbank.comÂ
Information Technology at the forefront of Operational Risk:
But âŚ.!
ď§ The Introduction of any form of technology in a given production process or the mere
modification of an existing IT environment necessitates a number of changes which
spillover on Branch Performance: Staff Skills, Workflows, Policies & Procedures, and a
host of other changes.
ď§ In todayâs technologically intense production
processes, information technology (IT) risks cannot be
considered independently of other types of risks since
it reflects on our ability to serve and satisfy our clients.
ď§ Recognizing these challenges and acknowledging that
the Branch has a role to play in managing this risk will
put management one step ahead. Because processes are
Technology dependent, data collection has changed from being mostly qualitative to
overwhelmingly quantitative; Types/Nature of Mistakes committed by Branch
Employees are Different; etc.
Head of Retail BankingÂ
is a Member of the ITÂ
Steering Committee,âŚÂ
Or Not!
Information Technology
9. Mohammad Fheili â fheilim@jtbbank.comÂ
Changing Customer Expectations and the Power to
Punish:Power has shifted to the customer as they become more connected, more demanding and less
loyal.
ď§ Instilling the vision and values needed to rebuild trust.
ď§ Harnessing big data analytics, social media
monitoring and other new forms of insight to
anticipate and respond proactively to changing
customer demands. If you donât Duly respond, some other Banks will;
and the Cost of âSwitchingâ is negligent.
ď§ How to gain clearer line of sight to customers, speed up decision making and
overcome institutional resistance to change.
ď§ Shift from productâpush to customer solutions.
ď§ Accent on product specialization (âdepthâ) gives way to broader engagement,
analytical and change management skills (âBreadthâ).
Retail Banking UnitÂ
must AnticipateÂ
and Respond toÂ
ChangingÂ
CustomerÂ
Demands!
Customer Expectations
10. Mohammad Fheili â fheilim@jtbbank.comÂ
Digital Competitors and the Age of Innovation:As the
pace of innovation accelerates, developments that would have taken years to impact on the market can now
become consumer expectations in a matter of days or months.
ď§ New competitors have head start on trust.
ď§ Operational barriers to entry are disappearing as techâenabled entrants use digital distribution
and advanced customer profiling to break into the market.
ď§ How to create a Business Model that is Flexible enough to
reinvent itself when better technologies or potential
partners come along.
ď§ How to lead innovation â even fast following could leave your business marginalized.
ď§ How to create an adaptable workforce, unbound by hierarchy, organizational
siloes or restrictive practices.
The CultureÂ
& Practice ofÂ
RetailÂ
Banking isÂ
theÂ
Backbone ofÂ
WorkforceÂ
Agility!
Agility in the Digital Age
It is about the ability to make
choices, decide and act swiftly.
11. Mohammad Fheili â fheilim@jtbbank.comÂ
Equipped to Compete:The most successful businesses are going much further by
reâengineering their organizations towards new ways of meeting customer demands and opening up new market
opportunities. So is your business up to speed?
ď§ Is your thinking radical enough? ⌠Your Customer decides; NOT YOU!
ď§ Does your mission embrace the values of the postâcrisis
world?
ď§ Does your organizational capability reflect your customersâ changing
expectations?
ď§ Do your organizational capabilities reflect the new economics
of your business?
ď§ Is your organization ready for change?
Since BranchesÂ
are the Lifeâ
Line of theÂ
Bank, RetailÂ
Banking UnitÂ
ought to beÂ
ResponsibleÂ
for securingÂ
Branch StaffÂ
Readiness!
Staff ReadinessÂ
16. Mohammad Fheili â fheilim@jtbbank.comÂ
⢠Most of the Risks Identified
throughout the Branch Network are
Operational Risks.
⢠Beware to Look In The Right
Direction . . . .
⢠Operations/Transactions in the Head
Office are Dramatically Different
from Operations in Branches.
⢠Therefore, the Types and Nature of
Risks Identified in the Head Office
are Significantly different from those
found in the Branches.
17. Mohammad Fheili â fheilim@jtbbank.comÂ
Retail Banking Division is/has:
ďź The Biggest Employer in a Typical
Banking Organization
ďź The Most Active Processor of
Transactions (i.e., Traffic) in a Typical
Banking Organization
ďź The Highest Utilization Rate of IT
Systems in a Typical Banking
Organization
ďź âŚ there is more
21. Mohammad Fheili â fheilim@jtbbank.comÂ
Flying From âBeirutâ To âParisâ Is a âServiceâ; Just Like Opening a Saving/Checking Account.
Descent Below Safe Altitude is an Incident (With Zero Losses this time). âŚ. BUT . . .
Minimum Safe Altitude (MSA)
IncidentAccident
Operational RiskLoss Events
YOU MUST Report ALL IncidentsÂ
irrespective of Current Consequences/Impact
23. Mohammad Fheili â fheilim@jtbbank.comÂ
Acquisition/
Credit
Specific
Customer
Service
Collect And
Review
Data
Credit
Review
Assess
Collateral
And Risk
Document
Approval
&
Pricing
Sales: Bank-Client Interface Financial & Risk Analysis: Understanding Risks Processing
Establishing
Contact
Evaluate first
customer info
Customer
Meetings
Debriefing
Request
documents
Obtain data &
information
Completeness/
plausibility
review
Follow up
Review document
Follow up with
Loan Officer /
Account Manager
Standardized
Credit Rating
Document on
other credit
related factors
Inspect
Object
Determine
Loan-to-value
Evaluate
Exposure
Data is
Sufficient
Complete
Loan
Application
Prepare
Credit rate
Handover
Credit File
Follow Up
Data is
Complete
Approval by
Decision
Makers
Check Compliance with
Authority Structure
Prepare Contracts
Get Signatures
Provide Security
Disbursement Review
Disbursement
Monitor &
Report
Resolution
Loan/Asset Life Cycle
Credit Approval Process
Implement
On the
Credit
Decision
Real-Time Management of Loan
Portfolio begins here by building
knowledge about Clients.
Credit Risk
Branch
Branch
24. Mohammad Fheili â fheilim@jtbbank.comÂ
Consequences:Â
Losses
Causes:
RiskÂ
Event:Â
LoanÂ
Default
⢠Loan Workout and Recovery
⢠Recovery is a Function of the
Quality of the Credit File and the
Legality of Accompanying
Documents
⢠Losses (Total or Partial) of
Principal and Interests
ďľ Dried up Cash Flow Sources: Clientâs
business received a bad hit.
ďľ Collaboration between the Branch Employee
and the Client in the provision of inflated
figures (Sales, Revenues, Cash Flows, âŚ)
leading to a falseâfavorable credit decision.
ďľ Overâworked, and UnderâStaffed Branches
leading to overlooking some critical changes
in business circumstances of the Client.
ďľ Incompetent Branch Manager Gave False
Recommendation which led to a Falseâ
favorable Credit Decision.
ďľ Poor/Inadequate Followâup at the Branch,
absence of Loan monitoring and Reviews
rendering the process weak in capturing
âWarning Signalsâ
ďľ Etc.
How Implicated isÂ
Branch Management inÂ
Credit Risk?
Now, Do You ThinkÂ
Branch ManagementÂ
ought to beÂ
involved?
Credit Risk
30. Mohammad Fheili â fheilim@jtbbank.comÂ
CALCULATIONofÂ
Bonus for each Branch
ALLOCATIONof Bonus to AllÂ
functions in the Branch
PAYMENTof Bonus to
Deserving staff
Key Performance Areas
_Reduction in Cost
of Fund
_Volume in Interest-
based Products
_Traffic: More Clients,
More Transactions
_Work Environment in
the Branch
_Identification od Key
Risk Indicators
_Risk Reporting
_Effective Risk Control
_AML Compliance
Based on each functionâs
Contribution to business
Development in the
Branch
_Branch Manager
_Deputy BM
_Head of Commercial Unit
_CSR
_Teller
_Head of Operation
_Clearing
_Office Boy
_Etc.
Based on each staffâs
Performance Appraisal
Review System
_âAâ Performers
_âBâ Performers
_âCâ Performers
_âDâ and âEâ do not
receive any bonus
irrespective of how the
branch performs
PILLAR 1: Reflects the
Bankâs Strategy, and Key
Performance Areas
PILLAR 2: Reflects the
contribution of every function
to the branchâs Bottom Line
PILLAR 3: Reflects the
performance of every staff in the
Branch
30
RiskâBased Performance
33. Mohammad Fheili â fheilim@jtbbank.comÂ
Collect
them
all!
Data
Data
Data
Data
Data
Data
Data
Data
Data
A Data warehouse is a good
idea, but a warehouse only
works when Staff bother to
make deliveries into it â
and thatâs where Branch
Staff need some sharp Interâ
Personal communication
skills, to persuade clients to
share their data. Without
the Right/Complete/Timely
Data, Risk Decisions are
Ambiguous, Ignorant, or
Uncertain!
Any Piece of InformationÂ
Will Have Implications OnÂ
Success.
Importance of Data
All Data is IMPORTANT
37. Mohammad Fheili â fheilim@jtbbank.comÂ
1 2
34
Your Assignment is to Pick
One Animal to take care of,
⢠for One day,
⢠Inside a 25m2 room; and
⢠Alone?
You May Ask Any Question
To Help You Prepare
Adequately For This
Assignment.
Importance of Data