Interview with Mr. Faisal Abdullah Al-Omran, CEO, ...

Interview with Mr. Faisal Abdullah Al-Omran, CEO, The Saudi Investment Bank

Q1. What are the hallmarks for a high performing board?

• Clarity regarding role and focus: High-performing boards begin with a clear understanding of their role, duties of responsibilities and expected contribution on an annual basis to Board meetings and Committee meetings.

• An effective chairman: The chairman sets the board’s tone and direction as well as its performance culture in a collaborative way. He creates the appropriate environment for full engagement by all members of the board, drawing out opinions and shaping discussions of sensitive issues. Effective chairmen have established an open and honest relationship with their CEO based on mutual trust and understanding.

• A balanced board team: A board of directors is only as good as its members—who bring the outside perspective and judgment on which the board’s oversight function is predicated. Recruiting the right board members is something that is easy to talk about but hard to execute. A high-performing board includes directors who can provide broad strategic perspective while also bringing their specific experience and expertise to bear on current and emerging boardroom issues. High-performing boards are balanced not just with respect to expertise but to temperament as well, mixing analytical thinkers with visionaries, conciliators with challengers. An important dynamic for board effectiveness is the conversation between the CEO and the board which should be fluid and ongoing. The CEO needs to be comfortable with using the group as a sounding board for ideas in their formative stage, so that he or she can get the full benefit of the board’s expertise.

• A culture of trust and respect: A board is not a collection of individuals and talents but a team. For it to function as such, effective chemistry, candid communication and mutual respect are critical. This ensures that probing questioning, constructive criticism and challenging debate can take place between the directors and the executive team.

Q2. How does SAIB endeavour to ensure its board is effective and highly trained?

The Bank has historically provided seminars and workshops for board members on emerging industry developments, compliance with laws and regulations updates together with important accounting standards developments that are applicable to us in the financial services sector. In the most recent past, the bank has provided workshops on the following:

• Best practices in Corporate governance
• Introduction to Value Added tax and what it means for Bank’s
• IFRS 9 dealing with Financial instruments and its implications for bank’s
• Anti-money laundering and Compliance updates
• Strategy offsite – Banking 2030
• Induction program for new directors
• Risk Management with a focus on stress testing

The Bank has largely had a consistent board over the past 6 years, its only in the current year that three new board members have been on-boarded to the Board. Historically the Board has been effective in ensuring that there is a balance of skills and personalities within its board members and who have been passionate about the Bank and its success.

The Board has been led by an effective chairman who has brought considerable expertise himself to the board dynamics and contributions to discussions. In 2018, the Board had requested an external board assessment process and the overall conclusion from this process was that the Governance Framework and Systems of the bank conform to both National and International Corporate Governance best practices. The Board is a high standard board, it has good group dynamics, its committed and there is excellent work being done at committee level as well as the board level.

Q3. How important are Corporate Governance initiatives to the Bank and why they are essential?

Corporate Governance policies and practices are very important to the Bank for many reasons. In order to improve the performance of the Bank, protect the interests of stakeholders and improve compliance with laws and regulations which applies in general to the banking industry. Banks are required to conduct its operations based on the principles of good corporate governance.

Good Corporate Governance practices at the Bank makes good business sense because of improved quality of decision making, better understanding of delegations of authorities so the right people are making the right decisions and approvals and better documentation and follow-up of decision making. So from the Bank’s perspective, good corporate governance makes business sense, by improved quality of decision making, better risk management and better follow up of decision made and improved documentation supporting these points.

Q4. Why has SAIB chosen to come on board as a GCC BDI corporate affiliate partner?

The Bank has in the past won the Corporate Governance Index Excellence Awards as presented by the College of Business Alfaisal University on two occasions the last one being this year.

GCC BDI are involved with this project at the university and with both organisations having a focus on Corporate Governance there is a commonality between the two organisations and the Bank considered being involved in helping improve the overall standards of Governance within the Kingdom is part of the bank’s efforts in playing its part in the success of the Kingdom of Saudi Arabia.

GCC BDI also hold a few networking events during the year and the Bank hopes to leverage of some of these events from an overall strategic initiative perspective.

Q5. What are your predictions for the main trends in the Kingdom’s banking market in 2019?

We are already well in the second half of 2019. The trends that we are witnessing are a continuance of a growing focus by the banking sector on digitalization and online banking services reflecting the mode of the financial sector and the strong competition which is pressing the fee income.

That pressure coupled with SAMA’s push to create a cashless society in addition to the growing appetite of the other sectors including telecommunication to tap into the payment systems is forcing banks to restructure and to strategize to ensure that digitalization is in the heart of their strategy. As a trend, we will payment innovation trends will occurring in conjunction with the internet of things, point of sale, mobile wallets, cryptocurrencies, and blockchain.

Further, Connected clouds where we will see public, private, and hybrid clouds are more interconnected to serve better the banking industry requirements. Additionally, we will see a growing utilization of Artificial Intelligence to enhance data analytics which will impact segmentation. These are some of the trends that we will see dominating 2019 and beyond. That being said, those changes will create the ability of the banks to compete and grow where margins are thin and competition is fierce.

Q6. What steps are important to keep the board steady in the era of digitalization?

Digitization is part of country 2030 vision and SAIB has already injected that inside its core strategic plan for the next three year. SAIB is advanced in its use of technology and has already gone thru a long journey in its digital proposition. SAIB has developed a number of innovative solutions in the area of digitization that are currently being used as a benchmark in financial industry within the region.

SAIB Board of Directors was involved in the strategic plan development which focuses heavily on digitization as a key enabler for improved customer experiences.

SAIB Board of Directors receives periodic reports and updates on the Bank’s overall progress in terms of the agreed strategic plan and with specific focus on strategic initiatives related to digitization.

Bank Senior management has clear KPIs on digitization which are cascaded down to all organization levels