On 1 July 2014, the LLB Group introduced an innovative, new pricing system. This means that the Liechtensteinische Landesbank and Bank Linth are among the first banks in Liechtenstein and Switzerland to provide retrocession-free asset management and investment advisory services. This is a part of the Group’s new strategic focus in line with the Focus2015 strategy. The Corporate Center made a decisive contribution to the realisation of this pricing system. For this purpose, the Group IT Division programmed 2’500 fee rules in the Avaloq banking system and tested around 5’000 pricing combinations.
Since the groupwide introduction of the Avaloq banking software package in 2011, we have been able to consistently improve our processing quality and productivity. By carrying out defined analyses and increasing automation, the Group IT Division helps to design more flexible work processes and implement more efficient distribution processes.
In 2014, the Group COO Division made great progress in improving efficiency, refining IT systems and simplifying structures. It also made cost savings of 11 percent compared with the previous year. Expenditure for IT projects amounted to CHF 17.5 million in 2014; 60 percent, or CHF 10.1 million, of our IT investments went to business projects, CHF 5.6 million was invested in our infrastructure and CHF 1.8 million represented the expenditure for current regulatory issues (see the chapter “”).
Mobile banking app
By using the most modern IT infrastructure, the Corporate Center of the LLB Group, as a partner for innovation, also helps the Group exploit new business potentials. Since December 2013, we have offered our clients an attractive and innovative mobile banking app for iOS, and also since June 2014 for Android smartphones and tablets (see the chapter “”).
In order to create new, intelligent solutions, the concerted interaction of IT and marketing plays a central role. Bank clients are increasingly active in social media networks, they select virtual channels to contact the bank, and the internet is evolving into a sales and interaction channel. Accordingly, we are planning to take full advantage of omni-channel banking, and in 2015 we shall formulate a strategy to connect bank branches with online banking and mobile banking. Today, for example, 65 percent of payment transfers throughout the Group are made via online banking or mobile banking. Technologies for mobile business and the integration of communication channels will play an increasingly important role for the LLB Group in the future.
Shared service centers
As the backbone of the LLB Group, the COO Division made a significant contribution in 2014 to adapting the LLB to face fiercer competition. The measures that began in 2012 with the amalgamation of the payment services, trading and securities administration of the LLB and Bank Linth in a shared service center at the headquarters in Vaduz were continued in 2014. In a new step, the payment systems of LLB (Österreich) AG in Vienna are also channelled through Vaduz.
On 1 January 2014, the electronic archives of the LLB and Bank Linth were merged in another shared service center. This ensures faster access as well as saving space and costs. Cost savings amounted to over 50 percent. The internal bundling of services within the Group is continually being monitored. Every year, our shared service centers participate in benchmarking projects to continually improve cost efficiency and quality of services.
The issue of the confidentiality of client data has been in the spotlight over the last few years. The Swiss Financial Market Authority (FINMA) has reacted by revising its circular letter “Operational risks for banks 2008 / 21”, which came into effect on 1 January 2015. Dealing with the risks associated with electronic client data has now been reformulated in appendix 3 of the circular.
The LLB Group will apply the new standards. These criteria include the documentation and classification of client identifying data (CID), the inventory of the data storage location and data access, structured risk control processes and the training of personnel who have access to client identifying data. The LLB Group has undertaken to continually adapt its security standards to suit market practice.
The amount of data that banks receive, analyse and store is increasing exponentially. On the one hand this includes client data such as the documentation requirements stipulated by the EU directive concerning the markets for financial instruments (MiFID II). On the other, digitalised data is received from business transactions with clients, as well as data generated by the expansion of communication via online channels and social media. Furthermore, more data is processed because of the stricter risk management systems for the overall bank as well as by the legally stipulated stress tests.
Since the summer of 2013, the data center of the LLB Group has been located in Eschen, Liechtenstein. Here the Group’s highly sensitive business data are securely protected. Data security is of cardinal importance to us. Information processing systems, which guarantee confidentiality, availability and integrity, also protect against threats and dangers, and help to prevent damage and minimise risks. However, our data center not only enjoys one of the highest security standards in eastern Switzerland, it is also a commitment to “green IT”. It was built in accordance with the tier III standard defined by the US Uptime Institute (see the chapter “”).
Integrity is a major attribute in gaining the trust of our clients, shareholders, employees and the general public. Accordingly, the LLB Group attaches great importance to the legal and compliance function. During 2014, it again expanded human resources in this unit. This independent organisational unit supports responsible, business-oriented activities and ensures that compliance risks are reduced or avoided, for example damage to the Group’s reputation or infringements of legal provisions.
Ensuring good compliance is a challenging management task. In 2014, the regular flow of information to the Group Executive Board was intensified. To improve compliance management, a “Compliance Best Practice” project was initiated. Via our learning management system, the Legal & Compliance Department organised e-tutor training courses on due diligence obligations and advanced training on our rules of conduct, which were defined in 2013. Moreover, a Group Regulatory Committee has been established to deal with the implementation of regulations.
In accordance with regulatory provisions, since the beginning of 2014, banks in the EU, and therefore in Austria, are obligated to set up an internal reporting point for employees, to which infringements of legal banking regulations in the broadest sense can be anonymously reported. The LLB Group has standardised the process to prevent infringement of legal banking regulations and has set up a confidential entity to receive anonymous reports.
In 2015, the Group Legal & Compliance Department will continue fine-tuning its measures to prevent money laundering and the financing of terrorism in accordance with know your customer (KYC) and know your transactions» (KYT) principles. In addition, the organisational unit is intensively involved in various innovative projects.