Backing our customers to achieve their dreams and ambitions - AIB Group plc Detailed Sustainability Report 2018
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Backing our customers to achieve their dreams and ambitions AIB Group plc Detailed Sustainability Report 2018
01 | Overview
About this report Contents
Throughout this report, “AIB Group”, “AIB”, “the Group” ”the bank” or “we” We have published a summary report and a detailed report, both of
refers to AIB Group plc and its subsidiaries. This is AIB’s third report on which are available on our website: www.aib.ie/sustainability. This site 01 Overview 1
non-financial activity, disclosing information specifically for the year ended also contains links to our related policies and codes, which are referenced Introduction
31 December 2018. Information on operations before and after these dates in this report. About AIB 2
02
may be included by way of context, in particular for the first quarter of 2019. A message from our CEO – Colin Hunt 3
Throughout this report we make reference to information contained A message from the Chair of our Sustainable Business
03
In Q1 2018, with the help of KPMG, we completed our second materiality in our Annual Financial Report 2018 (AFR 2018). This is available on Advisory Committee (SBAC) – Helen Normoyle 4
exercise, engaging 1,376 contributors from across our five key stakeholder our results centre: https://aib.ie/investorrelations/financial-information/ The value we create 5
04
groups: our customers, our employees, investors, government and society, results-centre/2018 2018 highlights in key areas 6
and regulators. From this exercise we identified macroeconomic issues and Scorecard and goals 7
05
material topics that our stakeholders told us mattered most to them. This Assurance Sustainability governance at AIB 8
report focuses on the top 10 macroeconomic issues and 14 material topics. Assurance has been provided by Deloitte on our preparation of the
06
Detailed Sustainability Report in accordance with the GRI standards. Engaging with our stakeholders
Audience for this report Their independent assurance statement is on page 54 of this report. Our Customer First agenda 9
This report is aimed at our various stakeholder groups who want to know Ongoing stakeholder engagement 11
more about our sustainability approach and performance in 2018. Active listening 12
Our materiality exercise 13
Reporting standards 02 Responding to macroeconomic issues 14
This report has been prepared in accordance with the Global Reporting
Initiative (GRI) Standards: Core option. It includes a GRI Content Index. Linking our approach 15
This is provided on pages 56-72 so that readers can easily find specific 1. Housing 16
data related to the GRI Standards. 2. Digitalisation 19
3. Lending 22
4. Entrepreneurship 24
5. Sustainable food production and agriculture 26
6. Brexit 29
7. Low-carbon economy 31
8. Financial literacy and inclusion 35
9. Skills and training 38
10. Customers in difficulty 41
03 Our people and our communities 42
Our people 43
Our communities 47
04 Risk and tax 50
Managing risk 51
Tax compliance 53
Deloitte assurance statement 54
05 Conclusion 55
Cover images
Helen Cheevers with baby Erik outside her new home at Baile na Laochra
in Ballymun, Dublin. 06 Global Reporting Initiative (GRI) Content Index 56
Participants at the AIB “DataHack”.
Rita Shah, Shabra Plastics & Recycling, Castleblaney Co. Monaghan.
AIB Detailed Sustainability Report 2018 1
AIB SUSTAINABILITY REPORT – INTRODUCTION
01 | Overview
About AIB
We are a financial services group operating predominantly in the
02
Republic of Ireland. We provide a comprehensive range of services to retail,
03
business and corporate customers, and hold market-leading positions in
04
key segments in the Republic of Ireland. We also operate in Great Britain,
as Allied Irish Bank (GB), and in Northern Ireland, under the trading name
05
First Trust Bank (FTB).
06
We operate under the following brands Sustainability at AIB
With 2.7 million customers and almost 10,000 • backing the wealth- and job-creators
employees, AIB is inextricably linked to the fabric within our economy; and
AIB, comprising personal, business, corporate and wholesale banking, of the economies in which we operate. • advancing the transition to a low-carbon
predominantly in the Republic of Ireland. environment.
We want our business to make a positive
impact, creating long-term shared value for In addressing these issues we must adhere
our customers, our other stakeholders and to sustainable business practices. Ultimately
EBS, delivering a suite of personal products in the Republic of Ireland, the communities in which we live and work. our social licence to operate, to contribute
primarily mortgages. and to lead will be determined by the trust
As a bank we have three basic functions: our stakeholders place in us. We will therefore
to convert savings and other deposits into continue to report on our progress to
financing; to manage credit and other risks; international best practice standards and
and to facilitate payments and transactions we will foster a culture of accountability and
Haven, providing mortgages through intermediaries in the efficiently and securely. Simple though these responsibility for our actions and outcomes.
Republic of Ireland. tasks appear, they are fundamental to modern,
day life. As such, we know that we have a Most importantly, in all that we do, we will
meaningful contribution to make in addressing be guided by our Purpose:
many of the pressing current and emerging
AIB UK comprises two trading entities: Allied Irish Bank (GB) in Great Britain societal issues, including: To back our customers
and First Trust Bank (FTB) in Northern Ireland. In April 2019, we announced • funding the providers and purchasers to achieve their dreams
that FTB would rebrand as AIB on a phased basis, over the next two years. of housing and homes;
• facilitating access to the digital economy for
and ambitions.
all via the provision of basic bank accounts;
AIB Detailed Sustainability Report 2018 2
AIB SUSTAINABILITY REPORT – INTRODUCTION
01 | Overview
A message from our CEO – Colin Hunt
I am deeply privileged to be leading AIB. trust not just in what we do, but equally We know we can play a central role in
02
It is an exciting – if not challenging time, to in how we do it. This demonstrates the Ireland’s programme to address climate
03
be in banking. AIB has emerged post-crisis value we create and the positive partnership change, helping to accelerate the transition
as financially sound with all core indicators we bring to communities and businesses to a low-carbon economy. To do this we
04
stable. We have also learned – along with all over Ireland. need to integrate climate change impact
our customers and many other stakeholders considerations across all our decision-making.
05
– many salutary lessons from our recent past. Externally, as the global economy becomes
06
more complex and rapid changes affect the While this report demonstrates some of the
We have an opportunity and a journey ahead way we all live and work, our primary focus good progress we have made, we know that
of us to do things differently in AIB: to be is helping our customers achieve what’s there is still more to be done. In the months
true partners to our customers and a strong important to them, based on building deep, ahead I will be working with the team to
collaborator with our other stakeholders. enduring relationships. accelerate our sustainability programme,
This report represents the progress we are with a particular focus on sustainable finance,
making on that journey. As demonstrated Positively we saw increases across our cultural transformation and our support
on pages 11-13, listening, understanding Net Promoter Scores (NPS) in 2018. Our of communities and livelihoods across the
“We know we can play a central
and responding to stakeholder issues remain personal relationship NPS increased by 14 AIB network. role in Ireland’s programme to
at the centre of our agenda. points from Q4 2017 to +35 in Q4 2018 and address climate change, helping
our SME Micro Score increased to +57, which At a time when trust in the banking industry to accelerate the transition to a
Our approach to sustainability starts from is the highest level since measurement of has been damaged in the court of public
the inside with our Purpose, which is to SME journeys began, demonstrating the opinion, it is more important than ever for low-carbon economy. To do this
back our Customers to achieve their dreams strong customer relationships we have built. AIB to actively demonstrate the value we we need to integrate climate
and ambitions. Our business is built on the create for our customers, communities and change impact considerations
strength of our people and I am proud of the Our people are increasingly more engaged our people.
across all our decision making.”
success we have already achieved together. and we now rank in the 72nd percentile
In 2018, we invested time and resources into ranking of Gallup’s worldwide database, I want to thank the Sustainable Banking
continuing to embed our Purpose throughout an increase from 62nd percentile in 2017. Advisory Committee and its Chair, Helen
our organisation and among our people. We are becoming a more diverse and Normoyle, for their work to date. This
inclusive workplace. In relation to gender Committee, and the teams that support
My focus, quite rightly, is now concentrated diversity, women currently account for 38.7% it, demonstrate the significance we are
on rebuilding confidence in and the social of our overall management population, and placing on putting the sustainability
licence of AIB, embedding standards and we are striving to improve on this, to achieve agenda at the heart of AIB.
behaviours expected by our customers and a target of 40% by the end of 2019.
other stakeholders, which ultimately drives Colin
AIB Detailed Sustainability Report 2018 3
AIB SUSTAINABILITY REPORT – INTRODUCTION
01 | Overview
A message from the Chair of our Sustainable Business Advisory Committee (SBAC) –
Helen Normoyle
As Chair of the SBAC, I am extremely pleased to the things that matter to our stakeholders, all the recommendations made to us. We are
02
to present our third Sustainability Report. including through the materiality exercise determined to build a culture of accountability,
03
Assurance has been provided by Deloitte on we did with almost 1,400 stakeholders on transparency and trust and this programme is a
our preparation of the Detailed Sustainability highlighting the macroeconomic issues they priority for us. The initial review of the findings
04
Report in accordance with the to Global want us to respond to and how we can rebuild indicate that, while we have made progress in
Reporting Initiative (GRI) standards. The AIB their trust. Throughout this report the outputs many areas, we have improvements to make
05
Annual Financial Report 2018 highlighted the of this work are clearly linked to our four pillar overall on our culture agenda. That said, progress
06
year as one of continued strong operational business strategy; Customer First, Simple & made embedding our Purpose, which gives
performance for us, our core financial metrics Efficient, Risk & Capital and Talent & Culture, all of us across AIB a unifying, relevant
are sound, our staff engagement and customer demonstrating how sustainability is core to AIB. and ambitious goal, has been a particular
NPS scores are increasing and our enhanced highlight in 2018.
operating model, centred on our customers, We are also providing greater transparency
is now in place. of our activities through our reporting. We are, We have a focused and clear sustainability
however, acutely aware that we have more to agenda and look forward to significantly
“We have continued to progress Externally, the year brought continued do, holding ourselves to account and allowing enhancing our output on this in the period ahead.
our sustainability agenda within macroeconomic stability to AIB’s core markets, our actions and progress be judged by those
AIB during 2018 as highlighted yet geopolitical issues, including Brexit, continue who are impacted by what we do and how As Chair of the SBAC our focus remains
through the many examples to dominate and bring much uncertainty for we do it. on continuing to support Colin Hunt, our
many of our customers and other stakeholders. new CEO, and the Executive team as they
in this report. We are actively For AIB this means we have a responsibility, as We continue to take learnings from the mistakes build-out our strategic and operational
working to rebuild our social one of the largest banks in Ireland, to reflect on of the past – including the tracker mortgage sustainability agenda – in alignment with
licence to operate, a critical step these and the other issues that matter most to examination programme. It is essential for our our business strategy.
our stakeholders, identifying the many ways long-term sustainability that we learn from
in our long-term recovery.”
we can make a meaningful contribution to the these mistakes, ensuring our culture and our It is both an honour and a great responsibility
economies we serve, and in doing so, continue operations are focused on customers and to chair the SBAC. It is a role I am privileged
to build value and trust in our business. A truly doing right by them all of the time. to undertake and one that enables me, along
sustainable bank is one that is trusted and, as a with the team, to support and challenge the
result, has the social licence to operate what is The outcome of the CBI culture review in business in key areas that ultimately drive trust
essential in order to both survive and thrive. November 2018 was welcome and, while it and engagement with all our stakeholders.
was provided to AIB at a time of CEO transition,
We have continued to progress our sustainability the outcomes are being reviewed at a range I would like to thank my Board colleagues
agenda within AIB during 2018 as highlighted of levels in AIB, starting with clear focus from and the Executive team for their support
through the many examples in this report. We our Board alongside our new CEO and his in responding to this important agenda,
are actively working to rebuild our social licence Management team. The team, in partnership for the Bank and for our wider stakeholders.
to operate, a critical step in our long-term with the senior leadership of the business, are
recovery. We are listening and responding determined to build an action plan to address Helen
AIB Detailed Sustainability Report 2018 4
AIB SUSTAINABILITY REPORT – INTRODUCTION
01 | Overview
The value we create
02
03
04
05
2.7m 9,831 3,700 Personal main
06
current account
Customers in Ireland Employees Suppliers
and the UK (full-time equivalent)
Business main
current account
#1
In Ireland
Personal
credit cards
c.940,000 1.38m 1.8m 324 Foreign direct
investment
New mortgage
lending
Active mobile customers Active digital customers Daily interactions Locations across
Ireland and the UK
+35 +24
Relationship – Relationship – Value created
Personal SME
+50 Employees Suppliers Community Taxes
Homes
transactional
€786m €1,121m €14m €571m
Salaries and benefits In procurement Total community Total tax paid
investment and collected
Information as at December 2018.
Sources: AFR 2018, Independent Market Research and Company Information. AIB Detailed Sustainability Report 2018 5
AIB SUSTAINABILITY REPORT – INTRODUCTION
01 | Overview
2018 highlights in key areas
The below issues (1-10) were identified as important to our stakeholders as part of
our materiality exercise completed Q1 2018 with input from 1,376 of our stakeholders,
more details of which can be found on pages 12-15.
02
03
04
1. Housing h i k 4. Entrepreneurship h m 8. Financial a e k m Our people b f g h m
literacy and inclusion
05
• 13,937 homes financed – €2.8bn in • €170m invested in equity funds • 72nd percentile on worldwide
new lending • Sponsor of the UCD Start-Up • Enhanced support for Gallup database for engagement
06
• Funding for 4,700+ new housing units Programme vulnerable customers • 38.7% female representation at
in addition to 500+ social units • 500 business owners took part in AIB • Winner of 3 categories in the management level
• Fair pricing – same rates for both new Women in Enterprise Programme Nala Plain English Awards • 27% female representation
and existing mortgage customers • 37,500 basic bank accounts opened at Board level
• 250 specialist Homes Advisors • 5,500 second-level students attended • 6 employee resource groups in place
• +50 NPS result for our Homes journey AIB Future Sparks for employees
• Working with iCare on mortgage-to- 5. Sustainable food k • 129 second-level schools participated • Launched Mentor Her
rent solution production and agriculture in AIB’s Build a Bank • Employer of the Year at the Women
in Finance Awards
• 15 dedicated Agri Advisors • Distinction in Inclusion & Diversity
• Ongoing partnerships with Teagasc at the HRD Awards
2. Digitalisation c n • Agri Matters sent to 15,000 farmers • Member of the Open Doors initiative,
• 500 attendees at the Irish Grassland 9. Skills f g h
promoting inclusion in the workforce
• 1.38 million active digital customers Association summer tour and training
• 940,000 active customers on mobile
app (+20% on 2017) • 86 new graduates joined our business
• 45 million transactions completed • Launched our Transition Year
b l Programme focused on STEM Our b e g h
online or on mobile 6. Brexit
• Expanded our digital wallet to include • 200 students hacked for Inclusion communities
• 32 Brexit Advisors now in place in the AIB DataHack
Google Pay, Apple and Fitbit Pay • Launched AIB Together
• Quarterly Brexit Sentiment
• Financial Crime Awareness week • Community partner SOAR
indices issued
held in support of the “Fraud Smart” increased reach by 60% as a result
• Over 19,600 customers utilised our
campaign of our support
online Brexit Ready Check d e h m
10. Customers • 3,000 volunteering hours recorded
in difficulty • €14m in community investment
• Agreed 1,575 retail mortgage • 2 days per employee to volunteer
3. Lending d e k m k
7. Low-carbon economy solutions with our customers in their local community
• No. 1 for foreign direct investment • c.35,000 customers completed financial • Sponsorship of Gaelic Athletic
• Maintained our CDP Climate Change
• €12.1bn in new lending drawdowns health checks Association Club and County
A rating
• Lending to 29,293 SME and corporate • Reduced NPEs by 41% to €6.1bn championships extended by 5 years
• Expanded Centre of Expertise for
customers totalling €5.3bn • 1,500 employees in place to support • AIB Art lending expanded to third-level
Energy, Climate Action & Infrastructure
• +57 NPS for the SME Micro journey customers in difficulty institutions and healthcare facilities
• Signatories of the Low Carbon Pledge
AIB Detailed Sustainability Report 2018 6
AIB SUSTAINABILITY REPORT – INTRODUCTION
01 | Overview
Scorecard and goals
Our Group strategy comprises four pillars: Customer First, Simple & Efficient, Risk & Capital and Talent & Culture.
Under each of these pillars we have medium-term financial and non-financial targets. We have also introduced a
02
number of new non-financial targets for 2019, enhancing the transparency of our reporting.
03
Strategic pillar Definition Outcomes 2017 Outcomes 2018 Target 2019
04
Customer First
Relationship Net Promoter Score (NPS) A measure of our customers’ overall AIB relationship experience Personal +21/SME +19 Personal +35/SME +24 > +50
05
Transaction NPS
06
Measured after customer transactions for key touch points +39 (all) Home +50/SME +57 Homes > +50/SME > +60
4,700 new units and c.5,500 new units and
Homes – new units and social housing units The number of new and social housing units funded N/A
500+ social units c.500 social units
The number of customers to receive a mortgage approval in principle within
Homes – mortgage journey New New 7 out of 10
90 minutes
Homes – buyer education programme Number of national mortgage educational events for home buyers pre-purchase New New 12
SME lending The amount of new lending provided to SMEs €1.4bn €1.27bn €1.48bn
Simple & Efficient
Active digital customer base % number of our active customers transacting digitally 53% 57% 62%+
Cost income ratio (CIR) Financial benchmark of efficiency 49% 53% 82%
of my Company makes me feel my role is important.”
Community investment programme The community volunteering hours our employees have completed Not captured 3,000 15,000
AIB Detailed Sustainability Report 2018 7
AIB SUSTAINABILITY REPORT – INTRODUCTION
01 | Overview
Sustainability governance at AIB
Strong governance frameworks are key to delivering on our strategy. AIB’s
02
Board of Directors established a number of Board Committees and Board
03
Advisory Committees to oversee specific areas of the Group’s operations
04
while the Board retains ultimate responsibility, ensuring a robust approach.
05
06
Sustainable Business Advisory Our sustainability agenda Building this report
Committee AIB’s Office of Sustainable Business (OSB) Our 2018 Sustainability Report is built from the
The Sustainable Business Advisory Committee works across the bank to provide direction and feedback we received from our stakeholders Board of Directors
(SBAC) was established in 2016 and is chaired focus for our sustainability agenda. The OSB throughout 2018, both ongoing and via
by Non-Executive Director Helen Normoyle. Its also supports our CEO and the ExCo on the specific communication from the OSB with our
membership includes Non-Executive Directors, development and execution of this agenda. five key stakeholder groups – our customers,
Carolan Lennon and Jim O’Hara, and This work is overseen by SBAC, which provides our employees, investors, government and Sustainable Business
members of Senior Management, including guidance and advice to the Board of Directors. society, and regulators – to identify the most Advisory Committee
the Chief Executive Officer, the Chief People pressing challenges and opportunities where
Officer and the Chief Customer & Strategic A key objective for the OSB is to work with the we can make a real contribution.
Affairs Officer. The Head of the Office of business to continue to integrate Environmental,
Sustainable Business is also in attendance. Social and Governance (ESG) principles across As with our previous reports, we are
CEO and Executive Committee
SBAC meets a minimum of four times every all our activities. This includes understanding, continuing to report in accordance with the
year and met eight times during 2018. measuring and disclosing the impact of our Global Reporting Initiatives (GRI) standards,
activities on all our stakeholders, society Core option details of which can be found
Since its establishment, SBAC has continued and the environment. This is a phased and on pages 56-72.
to enhance AIB’s focus on building a long- two-way process that also requires us to Sustainable Business
term sustainable business. It focuses on areas capture our stakeholders’ concerns and Executive Council
For further information on
including conduct, culture and sustainability expectations for our business. Governance at AIB please see
practices across our business and on our our AFR 2018, located in our
community programme. These expectations are used to help inform
results centre:
and shape our objective setting, performance Office of Sustainable Business
https://aib.ie/investorrelations/
Sustainable Business Executive Council measurements, policy approach and
SBAC is supported by the Sustainable Business operational practice, particularly in terms financial-information/results-
Executive Council (SBEC), which comprises of the provision of credit. centre/2018
members of the Executive Committee (ExCo)
and senior managers representing a cross- Over the past year we have continued to make
section of the bank’s different functions. progress in integrating ESG ambitions across
Its role is to support and implement AIB, and we recognise that we have more to
ongoing sustainability projects in AIB. do to fully embed this in all of our activities.
AIB Detailed Sustainability Report 2018 8
AIB SUSTAINABILITY REPORT – ENGAGING WITH OUR STAKEHOLDERS
01 | Overview
Our Customer First agenda
Our Customer First agenda means having an unrelenting focus on our
02
customers, driving positive outcomes and ensuring a Customer First
03
culture across AIB. It also means that when things go wrong, we listen,
04
learn and work to put things right for the customer.
05
06
Conduct • New training, including: Introduction to • Product approvals process; Enhancing our approach
Central to our conduct strategy is our Vulnerability, Living with Dementia and • Post-implementation reviews; We continue to improve the way we manage
Customer First agenda, which links strongly Mood Matters (focusing on mental health); • Periodic product reviews (annual, our customer complaints. When things go
to our Purpose. Our Customer Advocacy team • Enhanced links with relevant parties bi-annual or tri-annual reviews); and wrong we do our best to fix them, creating
works to drive positive customer outcomes including the Health Service Executive • Product withdrawal process. the best and fairest outcome for our customers.
in our day-to-day business operations. (HSE); and This means we put our customers first while
• Contribution to the BPFI Safeguarding Your Customer Care Limerick meeting our regulatory obligations.
The activities of our Customer Advocacy Money guide. We set up Customer Care Limerick, in 2016 as
team are overseen by the Chief Customer a central team to manage complex complaints The importance of developing soft skills in our
Advocate who is the Chair of the Group Product governance and errors. Customers are provided with an customer-facing staff is recognised throughout
Conduct Committee (GCC). This Executive Product governance is the process of creating, individual case handler who acts as a central the business and our complaints teams, in
sub-Committee informs the SBAC on all maintaining and retiring financial products in point of contact. Here all complex complaints particular, attend classroom training courses
conduct-related matters. a way that ensures our customers receive a and errors for all our Local Markets – branches, in this area of development. Our aim with
product that is appropriate for their immediate business centres and Homes teams across the these training initiatives is to empower our
During 2018, we made progress on a number and future financial goals. Republic of Ireland – are managed centrally. people to resolve complaints confidently and
of conduct-related activities, including: create a better experience for our customers
• Supporting the organisational roll-out The GCC has primary responsibility to provide The expert knowledge of Customer Care when they have complaints.
of the bank’s Purpose; oversight and monitoring of the Group’s Limerick and concentrated focus on resolving
• Providing training and support to our products and propositions portfolio, complex complaints and errors, has led to faster Please see GRI Content Index page 72.
people on conduct and related areas, as well as related customer protection resolution times for our customers. On average,
such as how best to support vulnerable and conduct issues. the team takes 13 days to resolve a complex
customers; complaint, which is down from 27 days before
• Benchmarking best-in-class organisations’ The GCC operates in line with our Product this centralisation. The Complaint Journey NPS
approach to conduct, to aid our continuing and Propositions Oversight and Governance significantly improved to -11 at the end of 2018,
improvement; Policy, which is owned and overseen by our compared to a low of -47 at the end of 2015.
• Progressing our vulnerable customer Operational Risk function. This policy consists
programme, providing better tools and of four key elements:
supports for customers and employees;
AIB Detailed Sustainability Report 2018 9AIB SUSTAINABILITY REPORT – ENGAGING WITH OUR STAKEHOLDERS
01 | Overview
Our Customer First agenda continued
02
Customers in difficulty The tracker mortgage examination
03
Supporting customers who are in financial Since 2015 AIB has undertaken a March 2019, 99% of customer accounts
difficulty remains a priority for us. We offer the comprehensive review of customer deemed impacted had been paid redress
04
most restructuring solutions in the Irish market mortgage accounts with regards to tracker and/or compensation.
05
and have a dedicated team of over 1,500 staff rates in accordance with the Central Bank
in place to help customers. of Ireland industry-wide Tracker Review We have also given a set payment towards
06
Framework. Our review found we fell short the cost of independent professional advice
We have updated our website (see link below) on our obligations to some customers, and have established an independent
to support customers who are worried about including instances where we were not appeals process. We have appointed an
missing payments, providing tools that may sufficiently clear with them or where we independent third party, KPMG, to review
be helpful and, importantly, encouraging failed to honour contractual commitments. key aspects of our work. These steps are
customers to get in touch as early as they can By the end of 2018, over 11,900 customer in line with the principles outlines by the
if they have concerns. Further details can be accounts had been deemed impacted Central Bank.
found on page 41. by our review, and in some of these cases
customers were charged too high a rate It is clear that these issues should never have
For customers that engage with us, we aim of interest on their mortgage accounts. happened and our review is now nearing
to restructure and support viable businesses its conclusion. Our priority has been putting
and keep families in homes where sustainable Putting this right for our customers has been things right for those customers impacted
solutions can be agreed. and continues to be a top priority for us. by the issue. If customers have any queries,
Through our review we identify customers they can call our dedicated Helpline on:
https://aib.ie/worried-about- impacted by a failure, put these customers 1 800 235 460 (or +353 1 7715888) between
payments back in the position they should have been 8am and 7pm, Monday to Friday.
in and compensate them. By the end of
Key points
from 2015 to 2018 from 2015 to 2018
27
days to resolve
13
days to resolve
-47
complaints NPS
-11
complaints NPS
complex complaints complex complaints
AIB Detailed Sustainability Report 2018 10AIB SUSTAINABILITY REPORT – ENGAGING WITH OUR STAKEHOLDERS
01 | Overview
Ongoing stakeholder engagement
We know how important it is to listen to, and engage
02
Regulators Customers
with our stakeholders on an ongoing basis. Their feedback
03
and experiences inform and guide us, helping us to focus
Our 5
04
our actions so that we can improve our service to them.
stakeholder
05
The below table lists our key stakeholder groups and the groups
06
ways we continue to engage with them.
Government Employees
& Society
Investors
Continual stakeholder engagement
Customers Employees Investors Regulators Government & Society
Materiality exercise Materiality exercise Materiality exercise Materiality exercise Materiality exercise
Net Promoter Score (NPS) iConnect employee Comprehensive Investor Regular and ongoing structured Regular and ongoing structured
engagement survey Relations Programme engagement engagement
Ask AIB (social media communications)
Performance review process Regular and ongoing structured Site visits Direct partnerships
Complaints monitoring engagement
Speak Up escalation process Regulatory reporting AIB Together (volunteering
Annual General Meeting (AGM) AGM and shareholder services and financial support)
Team meetings and management
AIB website (Help Centre, town hall engagements Investor Relations website Community initiatives
Financial planning tools)
Industrial relations discussions Financial reporting Financial reporting
Internet Banking Support
Employee Resource Groups (ERGs) Industry conferences Surveys
Focus groups
Health and safety monitoring Education and inclusiveness activities
Reputation tracking
Intranet (internal
Quantitative and qualitative research communications channel)
Customer visits and communications
AIB Detailed Sustainability Report 2018 11AIB SUSTAINABILITY REPORT – ENGAGING WITH OUR STAKEHOLDERS
01 | Overview
Active listening
We want to understand the most pressing challenges and opportunities
02
where we can make a meaningful contribution. In order to do so,
03
we asked our stakeholders to identify the macroeconomic issues
Our five stakeholder groups
04
and material topics of most importance to them as part of our second
materiality exercise in 2018.
05
06
With the help of independent advisors KPMG, Secondly, we wanted to determine what
in early 2018 we engaged with 1,376 individuals macroeconomic issues – such as Brexit
across our five stakeholder groups – our or housing – are of most concern to our
customers, employees, investors, government stakeholders, and which of these they
& society, and regulators – to complete AIB’s believe should be a priority for us. Regulators Customers
second materiality exercise.
1,376
We also wanted to understand how we can
Firstly, we asked stakeholders which continue to regain the trust of our stakeholders,
material topics – such as transparency in order to carry on the work detailed in our
and culture – were the most important previous sustainability reports. We made this
for AIB to address within our business. a key component of our materiality exercise
Stakeholders
by asking stakeholders how we could continue engaged
to rebuild our social licence to operate.
The outcomes of our materiality exercise were
then validated through a series of workshops.
Participants included representatives from special Government Employees
interest groups and both AIB and non-AIB & Society
customers. We have used the outputs from
our materiality exercise to inform, frame and
focus this report.
Investors
AIB Detailed Sustainability Report 2018 12AIB SUSTAINABILITY REPORT – ENGAGING WITH OUR STAKEHOLDERS
01 | Overview
Our materiality exercise
Material topics – Our material topics – top 14 out of 32 Macroeconomic issues – Macroeconomic issues – top 10
02
continuing to rebuild trust making a meaningful
03
a Making our services and products 1. Housing
Our stakeholders were asked to choose transparent to consumers contribution 2. Digitalisation
04
between a range of material topics that reflect b Engaging with all our stakeholders We wanted to know which macroeconomic 3. Lending
how we operate and to rank these topics in 4. Entrepreneurship
05
regularly issues were most important to our stakeholders,
terms of their importance in rebuilding trust taking in social, environmental and economic 5. Sustainable food production and agriculture
c Protecting our customers’ privacy and data
06
in AIB. themes. 6. Brexit
d Pricing our products and services fairly
7. Low-carbon economy
We asked our stakeholders: e Improving our customer experience and 8. Financial literacy and inclusion
So we asked them:
satisfaction levels 9. Skills and training
f Talent attraction, retention and development 10. Customers in difficulty
g Employee engagement and satisfaction
“In your opinion, what actions h Providing business leadership and vision “What are the social, The chapters of this report are framed around
can be taken within AIB to i Maintaining a profitable and financially environmental and the top 10 macroeconomic issues identified
continue to rebuild trust sustainable business economic issues that and we have linked each issue to what we
through responsible banking j Complying with laws, codes and regulations you believe AIB is best feel are the most relevant material topics
practices and operations?” k Providing responsible products and services placed to address?” (although many material topics may be
l Managing our business risks effectively relevant to that issue).
m Our business culture and ethical behaviour
n The stability, security and continuity
We have made the material topics of greatest of our business services In addition to our stakeholder groups,
significance – the top 14 material topics out we conducted interviews with our CEO and
a j
of 32, as illustrated in the graph on this page – e members of the ExCo and held workshops
Important to stakeholders
c
k m
d
our focus. They form the basis of our Global l
with internal and external stakeholders
o n
Reporting Initiative (GRI) report, as detailed o
g
b to validate the outputs from this exercise.
in the GRI Index appendix. o o f
h i
o o o
o o
o
o o o
Important to AIB
Material topics Please see GRI Content Index page 62 –
Other items indicators 102-44 and 102-47.
AIB Detailed Sustainability Report 2018 131. Housing
01
2. Digitalisation
macroeconomic issues
02 | Responding to
3. Lending
4. Entrepreneurship
5. Sustainable food
production and agriculture
6. Brexit
03
7. Low-carbon economy
04
8. Financial literacy
and inclusion
05
9. Skills and training
06
10. Customers in difficulty
Responding to
macroeconomic issues
Our stakeholders highlighted the following macroeconomic
issues as being of material importance:
AIB Detailed Sustainability Report 2018 14AIB SUSTAINABILITY REPORT
01
macroeconomic issues
02 | Responding to
Linking our approach
We have linked each macroeconomic issue to our material topics and stakeholder groups.
These are indicated at the top of each page. Please use the table below as a reference.
03
04
Our stakeholder groups Our material topics Macroeconomic issues
05
06
a Making our services and products transparent to consumers 1. Housing
b Engaging with all our stakeholders regularly 2. Digitalisation
Customers c Protecting our customers’ privacy and data 3. Lending
d Pricing our products and services fairly 4. Entrepreneurship
e Improving our customer experience and satisfaction levels 5. Sustainable food production and agriculture
Employees 6. Brexit
f Talent attraction, retention and development
7. Low-carbon economy
g Employee engagement and satisfaction
8. Financial literacy and inclusion
h Providing business leadership and vision
Investors 9. Skills and training
i Maintaining a profitable and financially sustainable business
10. Customers in difficulty
j Complying with laws, codes and regulations
k Providing responsible products and services
Government
& Society l Managing our business risks effectively
m Our business culture and ethical behaviour
n The stability, security and continuity of our business services
Regulator
AIB Detailed Sustainability Report 2018 15Stakeholder Groups Material Topics
AIB SUSTAINABILITY REPORT h Providing business leadership and vision
01
i Maintaining a profitable and financially sustainable business
k Providing responsible products and services
macroeconomic issues
02 | Responding to
1. Housing
Housing is one of the biggest social issues in Ireland today. AIB plays a critical role at
every point in the housing chain: from providing funding for large-scale developments
03
to creating a more efficient journey for home buyers to collaborating with housing
04
associations. Every day we back our customers to have a place that they can call home.
05
06
Our Homes business
A home is much more than bricks and mortar; 2018 progress
it is about a sense of belonging and a sense
of community. While we are the leading Finance for
13,937
development
mortgage provider in Ireland, our aim is to do land
more: to re-imagine how we can back more
Engagement with
people to have a place that they can call home. customers in difficulty
and reduction in
non-performing loans
Funding homes financed – €2.8bn
In 2018, we announced a new operating for housing
model in AIB, effective from January 2019, developments in lending
g Value Ch
which is centred on being simple, agile and
sin
4,700+
clear while anticipating and delivering value
u
ai
Ho
n
for our customers and other stakeholders.
Ongoing
As part of this new operating model, we partnerships with
created Homes: a new business area with a iCare and Irish new housing units
Mortgage Holders Providing
singular focus on meeting the Homes needs Organisation 1 in 3 new
of our customers.
250+
mortgages
Funding for social
specialist Homes Advisors
and affordable Establishment of
housing a Homes Centre
of Excellence ongoing partnerships with
Approved Housing Bodies
including iCare
Source: Company information.
AIB Detailed Sustainability Report 2018 16Stakeholder Groups Material Topics
AIB SUSTAINABILITY REPORT h Providing business leadership and vision
01
i Maintaining a profitable and financially sustainable business
k Providing responsible products and services
macroeconomic issues
02 | Responding to
1. Housing continued
Our multi-brand strategy A Centre of Excellence
We are the leading mortgage provider During 2018 we focused on simplifying
03
in Ireland with a 32% share of the market, and streamlining our mortgage process
extending c.€2.8bn in new mortgage loans under our Mortgage Customer Experience
04
in 2018. (MCX) programme. The vision of the MCX
05
programme is to create a more convenient,
Our mortgage expertise is spread across faster and simpler mortgage process enabled
06
the country with over 250 specialist advisors by increased digital capability and an expert
either in branch or on the phone to support community of Homes Consultants.
our customers. We know that customer choice
is important. That’s why we have a multi- We created the Homes Centre of Excellence
brand mortgage strategy that includes AIB, (HCoE), developed an Express mortgage
EBS and Haven. journey, which is currently being rolled
out, and introduced the My Mortgage web
Our AIB brand offers the lowest Standard app, which enables customers to upload
Variable Rates (SVR), passing on variable rate documents, download bank form templates,
reductions to both new and existing SVR send and receive messages to/from AIB,
customers. In May 2018, as part of our and view their mortgage application status.
multi-brand strategy, EBS announced
significant reductions across all its fixed Social housing development fund
mortgage rates for new and existing Private In February 2018, we launched a new €100m Helen Cheevers with baby Erik outside her new home at Baile na Laochra in Ballymun, Dublin.
Dwelling Home mortgage customers while social housing development fund: dedicated
continuing to provide a cashback offer. funding for developers with housing projects Ó Cualann Cohousing Alliance
All fixed rates from one to five years were sold to local authorities or large Approved AIB provided finance to Ó Cualann affordable homes are mixed together
reduced to 3%. Housing Bodies. Together with our support Cohousing Alliance to build houses to form fully-integrated communities.
for affordable housing schemes, this in Ballymun/Poppintree in Dublin 11. Moreover, community spirit is engendered
underscores our commitment to operate Ó Cualann sourced the land from Dublin long before the homes are complete.
as a key stakeholder in all aspects of the City Council at a nominal fee per house,
residential sector. and in turn are selling them to the new There were already 17 families living in
owners on a cost basis, which can be Ó Cualann’s Baile na Loachra development
more than 30% lower than the market in Ballymun when an additional 11 families
value of similar properties in the area. received their keys on 2 August 2018 at a
ceremony on the estate. Ó Cualann is now
There will be 49 houses in total in the in discussion with other local authorities
estate, which have all been allocated. and agencies around the country.
In the Ó Cualann model, social and
AIB Detailed Sustainability Report 2018 17Stakeholder Groups Material Topics
AIB SUSTAINABILITY REPORT h Providing business leadership and vision
01
i Maintaining a profitable and financially sustainable business
k Providing responsible products and services
macroeconomic issues
02 | Responding to
1. Housing continued
2019 – looking ahead
03
04
90 mins
05
06
for 70% of customers to receive
a decision in principle
c.5,500
Planned funding for
new housing units
The launch of AIB, IMHO & iCare initiative.
AIB, IMHO & iCare initiative stay in their own home while ownership
transfers to iCare Housing. Any residual Ongoing partnerships with
AIB, the Irish Mortgage Holders mortgage debt following the transfer is Approved Housing Bodies
Organisation (IMHO) and iCare Housing fully written off.
have a joint initiative, focused on keeping
12
customers in their own homes who
have financial difficulty with mortgage “This is a ground-breaking example
repayments and who qualify for social of the private sector and the housing
housing. 514 mortgage-to-rent cases have charity sector coming together to provide new buyer
been approved across a number of financial a practical sustainable solution to an
institutions so far. This initiative has the
education events
acute social crisis.”
potential to positively impact about
David Hall, CEO of the IMHO and iCare
2,000 people.
If a customer’s mortgage debt is deemed
unsuitable following an affordability
assessment, they may then qualify for
ore can be found at:
M
www.icarehousing.ie,
www.aib.ie/icare-housing
New
10-year fixed rate mortgage
mortgage-to-rent, which allows them to and www.ebs.ie/icare-housing
Please see GRI Content Index
pages 64, 65 and 72.
AIB Detailed Sustainability Report 2018 18Stakeholder Groups Material Topics
AIB SUSTAINABILITY REPORT c Protecting our customers’ privacy and data
01
n The stability, security and continuity of our business services
macroeconomic issues
02 | Responding to
2. Digitalisation
Digitalisation presents both enormous opportunity and challenge. AIB is at the
forefront of digitally-enabled banking in Ireland with ongoing investment in our
03
technology, supported by a resilient and agile platform. We will continue to offer
04
innovative services while protecting our customers’ data.
05
Progress on digital sustainability payments migrated by the end of the year, minutes using just their smartphone. Of all
06
Our 2018 investment programme focused along with a new Digital Business Banking eligible new current accounts, 23% were
on ongoing system resilience, regulatory platform. We now have 80% of our Treasury opened using the mobile app. We also
2018 – key highlights
business working off our new platform. These became the first Irish bank to offer customers
1.38m
compliance, productivity enhancements and
enhanced data and analytical capability to improvements to our infrastructure have been the ability to purchase travel insurance
improve customer satisfaction. Through made while maintaining high levels of service through the mobile banking app; an option
automation, we have made efficiencies in and without any significant customer services that 5,250 customers used in 2018.
areas that had been traditionally resource- outages over the past two years. active digital customers
heavy, allowing our customer-facing Our Digital Wallet
940k
employees to focus on adding value. Channel enhancements In 2018 we added Fitbit Pay to our Digital
We want to simplify and improve the Wallet, in addition to both Apple Pay and
experience for customers across all of our Google Pay options. Fitbit Pay uses existing
channels. At the end of 2018, we had 1.38 contactless functionality to make payments
active mobile customers
million active digital customers (Ireland), with a Fitbit device – no wallet or smartphone
representing a 10% increase year-on-year. necessary. (+20% from 2017)
940,000 of these are active mobile customers,
64%
representing significant year-on-year growth GDPR ready
of 20%. The General Data Protection Regulation (GDPR)
came into force on 25 May 2018, replacing
Reliable Our mobile app is one of the market’s leading the existing data protection framework under of key products sold online
We invest annually across our technology apps, up to 55% of all AIB personal lending the EU Data Protection Directive. The changes
45m
infrastructure to ensure it is reliable and resilient, and applications and 45% of lending approvals implemented as a result of GDPR enabled
meeting the needs of all our customers. were conducted through the app in 2018. AIB to build on the data protection safeguards
The 2018 Christmas period was the busiest we already have in place. This strengthened
Throughout 2018 we significantly invested in ever on our mobile banking app, peaking with our relationships with our customers and
new technology to underpin our core services. over 1.6 million interactions in one day, a 25% employees through enhanced transparency, the number of customer
This has resulted in absorbing a 20% increase in growth on the busiest day in 2017. In 2018 security and accountability in line with our transactions completed
transaction volumes and improving transaction we launched new-to-bank account opening Values and Purpose. online or on mobile
times by up to 30%. We continued the roll-out capability via smartphone: a unique capability
of our new payments engine, with 60% of for new customers to open an AIB account in Source: Company information.
AIB Detailed Sustainability Report 2018 19Stakeholder Groups Material Topics
AIB SUSTAINABILITY REPORT c Protecting our customers’ privacy and data
01
n The stability, security and continuity of our business services
macroeconomic issues
02 | Responding to
2. Digitalisation continued
Protecting data Anti-Money Laundering protection Daily user interactions
As part of protecting our customers’ data, In March 2018 we replaced AIB’s Anti-Money
03
we invest heavily in tools and services to Laundering engine with a new, more robust 2018
counteract the increasing threat of cyber crime. system, helping us meet our Anti-Money
04
We partner with other institutions across Laundering (AML), Counter Terrorist Financing 1.2M 12K
Mobile Kiosk/Tablet
05
Europe, the UK and Ireland (including Cyber (CTF) and Sanctions regulatory requirements
Interactions Logins
Defense Alliance which comprises of eight in a more efficient manner.
06
UK and Irish banks) to foster an open,
knowledge-sharing and mutual-protection Robotics and artificial intelligence 251K 18K
Over 1.8m
culture. We design and operate our systems to We have started to use artificial intelligence Internet
daily Contact
remain secure, while providing products and (AI) to improve customer experience and Banking Centre
Logins interactions Calls
services that are fit for purpose. We actively deliver operational efficiencies. In 2018,
manage and continuously test cyber threats to AIB delivered leading biometric capabilities in
prevent unauthorised parties from accessing, facial recognition on mobile, and we were the 101K 298K
Branch ATM
manipulating or acquiring private information. first bank in Ireland to apply voice biometric Transactions Withdrawals
recognition (Voice ID) across our telephony.
Open Banking To date, 20,000 customers have signed up
The introduction of the Payment Services to Voice ID.
Directive II (PSD2) in Europe and Open
Banking in the UK in early 2018 allows We are developing a personalisation platform
customers to grant third-party companies that uses data and AI to make every customer 2013
access to their financial data. It also enables interaction smarter and provide an enriched
third parties to initiate payments from a personalised experience for customers 148K
Mobile
customer’s account. Subsequent regulation across all our channels. We use robotics Interactions
has followed, seeing banks increase the for repeatable processes across a lot of
capabilities that third parties can utilise for service lines in our back office. The resulting
consenting customers. AIB successfully met efficiencies have ultimately improved our 208K 880K 18K
the January 2018 deadline to be compliant service for the benefit of our customers. Internet Contact
Banking
daily Centre
with these standards. Our digital architecture Logins interactions Calls
has allowed us to securely open our platforms,
enabling customers to take full advantage of
77K 432K
this new banking paradigm if they wish.
Branch ATM
Transactions Withdrawals
Source: Company information.
AIB Detailed Sustainability Report 2018 20Stakeholder Groups Material Topics
AIB SUSTAINABILITY REPORT c Protecting our customers’ privacy and data
01
n The stability, security and continuity of our business services
macroeconomic issues
02 | Responding to
2. Digitalisation continued
The National Project Awards 2018 Financial Crime Awareness week
Our Head of Enterprise Change, Declan In November 2018 we held a Financial
2019 – looking ahead
03
Rundle, won the top prize at the National Crime Awareness week across AIB. This was
Project Awards as he was named Project in support of the Banking and Payments
04
Professional of the Year. He was acknowledged Federation of Ireland’s (BPFI) wider “Fraud
€50m
05
for his role in reinvigorating the bank’s Change Smart” campaign which aims to raise
Governance and Project Management, which consumer and business awareness of
06
contributed to AIB’s transformation agenda financial fraud threats.
from 2015 to 2017. investment in improved system
We focused on the key aspects of financial performance in 2019
AIB also received the Private Sector Project crime (which include AML, fraud and
National Project Awards – Industry Professional of the
of the Year award on the same night. Indeed, sanctions) to highlight how it impacts
Year Declan Rundle and the GDPR team.
we had two finalists in this competitive category: our staff, our customers and our society.
GDPR and our Mortgage Customer Experience
Programme. The award went to our GDPR Topics and training over the week included: Extension of new-to-bank
team for their work on the roll-out of the • Human trafficking; account opening process
GDPR change across AIB. • Financial abuse of the elderly;
• Terrorist financing;
AIB Sponsors DCU Chair in Data Analytics • Anti-money laundering; and
With increased focus on data analytics across • The changing face of fraud.
business and society, AIB teamed up with
Dublin City University (DCU) to sponsor This was a great way to better understand PSD2/
a Chair in Data Analytics in 2018.
L–R: Yvonne Holmes, Head of Customer Analytics and
how financial crime impacts all of us and how,
by working more collaboratively across our
Open Banking
This new position, the first of its kind in Ireland,
Engagement Systems, AIB; Bernard Byrne, AIB; Professor
business, we can protect our customers Enhanced payment and
Brian MacCraith, President, DCU; Professor Tomas Ward,
reflects the growing importance of data AIB Chair in Data Analytics, DCU. and society. system functionality
analytics in enabling both private and public
sector organisations to gain valuable insights
The person taking up the position of AIB Chair
from the large volumes of data that they collect.
in Data Analytics is Professor Tomas Ward.
Professor Ward is an internationally-renowned raud Smart details can
F
Using this data to improve competitiveness, be located at the following link:
products and profitability is a priority for
scholar in the field of data analytics as applied Please see GRI Content Index pages 70
to human behaviour monitoring and joins DCU https://www.fraudsmart.ie/ and 71.
business, with research firm IDC predicting
from Maynooth University.
that revenue from commercial purchases of big
data and business analytics hardware, software
and services will grow to $210bn by 2020.
AIB Detailed Sustainability Report 2018 21You can also read
