Backing our customers to achieve their dreams and ambitions - AIB Group plc Detailed Sustainability Report 2018

 
Backing our customers to achieve their dreams and ambitions - AIB Group plc Detailed Sustainability Report 2018
Backing our customers
to achieve their dreams
and ambitions
AIB Group plc
Detailed Sustainability Report 2018
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
Backing our customers to achieve their dreams and ambitions - AIB Group plc Detailed Sustainability Report 2018
AIB SUSTAINABILITY REPORT – INTRODUCTION

                                                                                                                                                                                                              01 | Overview
About AIB

We are a financial services group operating predominantly in the

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Republic of Ireland. We provide a comprehensive range of services to retail,

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business and corporate customers, and hold market-leading positions in

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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

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First Trust Bank (FTB).

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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
Backing our customers to achieve their dreams and ambitions - AIB Group plc Detailed Sustainability Report 2018
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

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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

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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.

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– many salutary lessons from our recent past.     Externally, as the global economy becomes

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                                                  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
Backing our customers to achieve their dreams and ambitions - AIB Group plc Detailed Sustainability Report 2018
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

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                                           to present our third Sustainability Report.           including through the materiality exercise           determined to build a culture of accountability,

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                                           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

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                                           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

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                                           Annual Financial Report 2018 highlighted the          of this work are clearly linked to our four pillar   overall on our culture agenda. That said, progress

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                                           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
Backing our customers to achieve their dreams and ambitions - AIB Group plc Detailed Sustainability Report 2018
AIB SUSTAINABILITY REPORT – INTRODUCTION

                                                                                                                                                                                                         01 | Overview
The value we create

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                                                                                                                                                                                                         03
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                                                 2.7m                          9,831                             3,700                                              Personal main

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                                                                                                                                                                   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
Backing our customers to achieve their dreams and ambitions - AIB Group plc Detailed Sustainability Report 2018
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.

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  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

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  • 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

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  • 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
Backing our customers to achieve their dreams and ambitions - AIB Group plc Detailed Sustainability Report 2018
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

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number of new non-financial targets for 2019, enhancing the transparency of our reporting.

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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
Backing our customers to achieve their dreams and ambitions - AIB Group plc Detailed Sustainability Report 2018
AIB SUSTAINABILITY REPORT – INTRODUCTION

                                                                                                                                                                                                        01 | Overview
Sustainability governance at AIB

Strong governance frameworks are key to delivering on our strategy. AIB’s

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Board of Directors established a number of Board Committees and Board

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Advisory Committees to oversee specific areas of the Group’s operations

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while the Board retains ultimate responsibility, ensuring a robust approach.

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                                                                                                                                                                                                        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
Backing our customers to achieve their dreams and ambitions - AIB Group plc Detailed Sustainability Report 2018
AIB SUSTAINABILITY REPORT – ENGAGING WITH OUR STAKEHOLDERS

                                                                                                                                                                                                             01 | Overview
Our Customer First agenda

Our Customer First agenda means having an unrelenting focus on our

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customers, driving positive outcomes and ensuring a Customer First

                                                                                                                                                                                                             03
culture across AIB. It also means that when things go wrong, we listen,

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learn and work to put things right for the customer.

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                                                                                                                                                                                                             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   9
AIB 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   10
AIB 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     11
AIB 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   12
AIB 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   13
1. 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   14
AIB 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   15
Stakeholder 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           16
Stakeholder 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           17
Stakeholder 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           18
Stakeholder 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           19
Stakeholder 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          20
Stakeholder 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           21
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