HABIB BANK LIMITED

INFORMATION TECHNOLOGY DEPARTMENT

HBL OMAN

Strategic Plan

Habib Bank Limited

Centralised Operation
Qurram House , MBD Area
Tel: +968-24817194]
Fax: +968-24815809
Web page: www.hbl.om

Information Technology Department

HBL Oman
Strategic Plan
Table of Contents

1.

INTRODUCTION

2.

MISSION, STRATEGIES ETC.

3.

PRODUCT/SERVICE DESCRIPTION

4.

SWOT ANALYSIS

5.

FUTURE CHALLENGES & STRATEGIES

10

6.

FINANCIAL POSITION & PROJECTIONS

14

1.

Introduction

The IT Department at HBL plays a key supporting role in the planning and execution of the
Banks business strategy. It is fair to state that every business and support unit within the
organization is significantly dependent on technology in delivering their various products and
services, both internally and to our customers.

2.

Mission, Strategies etc.

The mission on the IT department is to consistently deliver a range of technology and systems
solutions, products and services in a manner which is based on our key values, namely:

Customer Focus
Proactive
Innovative
Timely
Superior Quality
Cost effective

3.

Product/Service Description

Background
The IT Department in Oman was formally established in early 1992 when the Bank made its
first investments in data processing. However, the strategy adopted at that stage was a
decentralized one, with separate database for each branch and with the key application being
MOBS, an in-house developed multi currency general ledger system which provided the
basic banking functionalities.
The decentralized approach towards data processing made sense when there was a weak
communications infrastructure and the need for automated data processing was relatively
limited. However, in 1999 HBL Oman IT management has start working on centralised
database and in year 2000 MOBS has converted to one database for all branches which
successfully implemented in HBL Oman and till 2008 HBL Oman branches were using
centralised MOBS whereas all other domestic and international operation of HBL were using
decentralised version of MOBS. However from 2000 onwards, it had become clear that the
decentralized model using MOBS had a limited life span and a new systems and technology
roadmap had to be developed, based on the following key strategic considerations:

Centralization: A centralized data processing was preferred as the existing

decentralized model led to higher operating costs, inconsistencies in the application systems /
operating software installed in the respective regions / international locations and lack of a
consolidated database.

Enhanced Functionality: MOBS is essentially a general ledger based accounting

system and does not provide many of the functionalities required to process new products,
which are largely technology-based. Rather than invest in MOBS, a conscious decision was
made to review the best of breed banking systems being used in other banks for deployment
at HBL.

Scalability: With over five million customers, nearly 1500 branches in Pakistan as
well as branches and subsidiaries in over 20 locations, it was recognized that we needed a
robust banking system, powerful machines to process these transactions and a robust
communications infrastructure

Security: While the branch network was the only distribution channel previously, it
was obvious that customers desired choices and HBL would need to invest in alternate
delivery channels, which are primarily technology based. Consequently, there was a need to
significantly upgrade our information security capabilities, both on the applications side as
well as in the technology infrastructure.

Where are we today

The revamping of HBLs IT systems and technology at Head Office started from 2002. At
that stage, the Bank decided to replace its legacy systems with the Misys suite of applications
for its banking operations and to upgrade its network infrastructure.
To date HBL has made substantial investments in acquiring and implementing new systems,
revamping of IT infrastructure, introduction of new delivery channels and building up a
robust Business Continuity capability. As of date, we have achieved the following:

All branches in Oman were moved to Misys in January 2009 and now have their end
of day transactions processed in the Equation core banking system, which allows us to have a
central database and the capability to have the financial / MIS data for Oman operation
available on a daily basis.

At the branch level, all Oman branches are on the Misys platform, with having the
capability to do teller transactions via the Cashier system.

Oman Operation data processing is done at Karachi Pakistan with the approval of
local regulator.

On the product side, various applications have been implemented which interface
with the Equation core banking system. These applications include Trade Innovation for
processing trade transactions, EBA and Cashier as front-end branch teller systems,
Intellimatch for nostro reconcilement, SMM for processing SWIFT messages, Mantas for
anti money laundering purposes, etc.

In the area of alternate delivery channels, we now offering ATMs, POS services to
our customers..

The network infrastructure in Pakistan has been revamped with the implementation
of HGN project. This provides the Bank with adequate capacity for expansion, growth, and
network resilience.

Business Continuity and Recovery site has been established at Seeb branch
TARGET ENVIRONMENT
This section addresses the target environment where we desire to be over the next three
years, i.e. 2015 2017. The underlying focus will be to build up on our existing strengths /
capabilities, take measures to overcome our deficiencies and above all position ourselves so
as to meet the key values outlined in our mission statement.
The key ingredients of our target environment are summarized below:

On the applications side, Head office have already defined the broad parameters of d
systems architecture, Most of the applications have already been implemented implemented
in HBL Oman ; however, a few of them are work in progress (Microsoft Exchange, Mobile

Banking and Profitability Analysis, Enterprise content management) while certain others are
still in the discussion / analysis stage

On the data processing side, our core data processing will continue to be done on
IBM i series machines. Head Office currently have three machines and will look to replace
the two older ones (OVR and INT units) with a new P6 machine. There are nearly 100 Intel
servers in the Data Center and will seek to rationalize them through greater use of blade
technology and virtual servers. The end goal is to have a greener and more efficient data
center.

In terms of the data communications infrastructure, HBL made a significant

investment and now HBL Oman now moved from point to point leased circuit to a cloud
based international MPLS.
.

Information security is becoming increasingly important, especially with the growing

use of alternate delivery channels. This is an area which HBL need to invest in and our target
environment envisages a scenario where all our IT assets are properly secured and monitored
on a real-time basis. In addition we need to ensure that data is processed in a secured
environment, its confidentiality and integrity maintained and unauthorized access not
permitted.

Within the IT & Systems Group at Head office , we need to develop products,
services and processes which lead to more efficient project management, development of key
performance / risk indicators and an overall service-oriented culture within the group.

4.

SWOT Analysis

To reach our target environment and implement the various key initiatives set forth above, we
have undertaken a comprehensive SWOT (Strengths, Weaknesses, Opportunities and Threats)
analysis, the key findings of which are given below. This analysis looks at both the internal
(specific to HBL) environment as well as external factors which impact, either positively or
negatively, the attainment of our objectives.
Strengths
Commitment by Top Management to support our key IT strategies.
Alignment of Business priorities with IT priorities
The centralized database n allows us to offer new products and services to our customers
in a better controlled and much faster time.
Straight through processing as systems are integrated with each other. This means
minimum manual intervention and enhanced controls.
DRP site in place to provide continuity of services with minimum disruptions.
Significant communications infrastructure capacity to cater for future growth and
expansion
Weaknesses
Absence of a formal project management process
At times the full benefits of systems implemented are not achieved, due to lack of
understanding / training or resistance to adoption of new processes and technology.
Aging staff force at lower and middle management level, resulting in the scarcity of the
staff having the skills and experience in implementing next generation technologies.
Weak application systems documentation resulting in dependencies on the key individuals.
An overly regulated IT environment which leads to additional paperwork and slows down
the pace of development work.
Opportunities
The systems and technology infrastructure is in place to allow us to further centralize our
operations processing functions.
Capacity available to take on high volume customer originated transaction businesses with
little or no further investments required in either the core banking system, hardware or
network infrastructure
Investing in e-commerce initiatives to meet customer needs, especially in the areas of
trade, cash management, incoming home remittances, etc.

Threats
Reliance on staff few vendors for critical services like key application, branch support and
hardware maintenance.
Retention of high quality staff due to the growing market demand for IT professionals.

5.

Future Challenges & Strategies

KEY INITIATIVES
During the next three years the following key initiatives have been identified for the IT. This
list is based on what we know as of date and changes would be made based on emerging
business and regulatory requirements. Work on several of these initiatives has already started
and for ease of reference, they have been identified with an asterisk (*) sign.
Applications
Debit Card offering for international branches*
Rollout of chip based EMV compliant cards*
Web based system for receiving incoming home remittances*
Implement SWIFT Workers Remittances solution*
Host international locations information websites under the hbl.com domain
Enterprise Content Management (ECM)
Delivery Channels
Replacement of ATM with CCDM*
Launch of Internet Banking*
Establishment of a secondary Call Centre*
Trade Portal for corporate customers
Infrastructure
IP Telephony
Exchange rollout for Oman
Replacement of existing AD & SMS Servers new generation of HP server series
Information Security
Risk review of all major applications and infrastructure
Security monitoring, intrusion detection and data loss protection solutions
Implementation PCI-DSS standards

HUMAN RESOURCE REQUIREMENT

The success of the IT centre in meeting its objectives is dependent on the availability of
resources in three critical areas, i.e. technology, capital and people. While the availability of
suitable technology and funding is generally beyond our control, we can effectively manage

the human resources within our department. Our challenge is to attract and retain high quality
staff, against a backdrop of a growing need for IT professionals .
As of date, HBL Oman 5 staff in the IT department payroll. Turnover has been moderate with
one IT staff leave the Bank during 2014 to pursue opportunities in other organizations.
Sourcing quality IT candidates is a challenge for us as most professionals prefer to work with
Local Banks IT where there are better opportunities for career growth. Nevertheless, we will
work with the HR department hire suitable candidates, with our primary focus being to attract
Computer Science or Engineering graduates from the top educational institutions in Oman
having 3-5 years IT-related experience. At this stage, they already have the basic technical
knowledge and through on the job exposure, they will be groomed to assume greater
responsibilities.
For our existing staff, we will continue to differentiate between the top performers and those
whose performance is at best average. Clearly, we will be focusing on adequately
compensating our top performers while concurrently working with HR to weed out the nonperformers.

6.

Financial Position & Projections

HABIB BANK LIMITE D
FINANCIAL PLAN 2010 - 2012
FORECAST
PROFIT & LOSS

DEC 07

DEC 08

MAY 09

DEC 09

PROJECTIONS
DEC 10

DEC 11

DEC 12

Rupees in Million

INFORMATION TECHNOLOGY & SYSTEM

S -GROUP
NRFF
-

Expenditure
Total staff cost 1
Non Contractual Payments

158
-

197
-

91
-

246

275

302

333

32
18
7
1
1
5
0

41
22
9
1
3
6
1

14
8
3
0
1
3
0

58
25
13
7
7
6

64
27
15
7
8
7

70
29
17
8
8
8

77
32
19
8
9
9

I.T. costs
Communication charges
WAN/internet charges & E-mail
Professional Consultancy Charges. 1
Maintenance of computer hardware 2
Maintenance of computer software 3

503
27
103
289
42
41

608
19
90
274
108
117

226
8
42
120
37
20

881
15
138
375
173
180

1,001
17
150
394
220
220

1,073
19
157
413
242
242

1,152
21
165
434
266
266

Travelling and Conveyance

141

38

12

13

13

14

15

322

341

37

357

450

425

400

10

0
1
2

4
4

4
4

4
5

4
6

Occupancy cost
Rent
Utilities
Rates, Taxes and Insurance
Repair & Renovation
Branch / Office Maintenance
Maintenance Office Equipments

Entertainment
Depreciation

Marketing

Other expenses
Legal charges
Auditors fees
Cash Handling / Movement Charges
Branch License
Training Expenses
Security Charges
Printing & Stationery
Others

12
0
2
0
6
3

11
0
1
4
5

Head office allocation cost

1,170

1,239

385

1,564

1,812

1,895

1,989

(1,170)

(1,230)

(385)

(1,564)

(1,812)

(1,895)

(1,989)

Total expenditure
Profit Before Provision

In large organizations, IT expenses usually constitute 5% to 10% of the companys total

operating expenses. Within HBL, the comparative figure has been 6.4% in 2007 and 5.7% in
2008. It is our strategic goal to bring this figure down to 5% or less over the next three years.

However, the key risk factor here is that in certain IT expense categories, e.g. professional
consultancy charges as well as maintenance of hardware and software, there is a significant
foreign currency component which makes it difficult to forecast the expenses over a three-year
period, given the volatility of the Pak Rupee viz a viz the major currencies. Nevertheless, we
have attempted to project the IT & Systems Group expenses over the next three years based
on currently planned IT initiatives and the overall macroeconomic indicators. The overall
numbers on a year by year basis are as follows:
Total Expenses
Increase
Year
(PKR Million)
(%)___
2009 (Forecast)
1,564
N.A.
2010 (Projected)
1,812
15.86%
2011 (Projected)
1,895
4.58%
2012 (Projected)
1,989
4.96%
The 15.86% increase in the 2010 projected expenses is mainly due to the full year impact of
investments being made in the current year. Once we are past the investment phase, the
growth in our core expenses is expected to be less than 5% p.a.
Key Assumptions
The expense numbers stated above have computed based on the following key assumptions:
There will be no change in the Pak Rupee / US Dollar exchange rate
These expense numbers are based on current planned projects. Expenses associated with any new
projects have not been factored in these numbers.
Staff costs are expected to grow by 10% p.a. No additional hiring is planned, other than for filling
existing vacancies and to increase the staffing in the Information Security Division. However, the
headcount and personnel costs would increase if we decide to in-source our Data Centers, with a
corresponding reduction in Professional Consultancy charges.
Occupancy costs are expected to increase by 10% p.a.
WAN/internet and e-mail charges are expected to increase by 8.7% in 2010 due to the full year impact
of additional communication links installed this year. Thereafter, we expect an increase of 5% p.a.
For professional consultancy charges, we are estimating a 5% increase p.a. over the 2009 forecast
numbers
Computer hardware and software maintenance charges will grow somewhat in 2010 due to additional
investments made and thereafter are projected to increase by 10% p.a.
Depreciation expenses are expected to spike to Rs. 450 million in 2010 and thereafter decline by Rs. 25
million per month as the runoff on depreciation charges is expected to be greater than incremental
depreciation expenses arising from purchase of new hardware and software.