Benefit Annual Report

THE NERVE CENTRE OF BAHRAIN’S FINANCIAL INDUSTRY ANNUAL REPORT 2009

VISION AND MISSION

VISION: We aim to sustain our leadership in Electronic Payments and Fund Transfer, Business Process Outsourcing and Risk Management in the financial and non-financial sectors by adding value for the shareholders and the community in the region and beyond.

MISSION: To continue maintaining the business support platform that caters for all Electronic Payments, ATM and Card Outsourcing Services, Internet Banking, and Risk Management Services which have direct values for the current and potential institutions and members.

02 | 03 BENEFIT ANNUAL REPORT 2009 | Vision

Success through

Innovation

COMPANY PROFILE

BENEFIT was founded in Bahrain in 1997 by seventeen commercial banks under the special license of “Provider of Ancillary Services for the Financial Sector”. Authorized by the Central Bank, this encompasses BENEFIT’s role as the National Switch of Bahrain.

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At the Core of Bahrain’s

Financial

Landscape

Following a number of mergers and acquisitions in the retail banking sector, these seventeen banks became fourteen: • National Bank of Bahrain • Bank of Bahrain and Kuwait • Ahli United Bank • Standard Chartered Bank • HSBC Bank • Bahrain Islamic Bank • CITI Bank • Bahraini Saudi Bank • Bank Muscat International • Arab Bank • Future Bank • Shamil Bank of Bahrain • Habib Bank • United Bank Limited

BENEFIT’s initial focus was the takeover of the national ATM switching system, which was previously operated by the Central Bank of Bahrain (CBB). BENEFIT’s network went on to expand beyond Bahrain’s market to encompass the GCC countries under the GCCNet arrangement along with Lebanon, Jordan, and Egypt.

Today, its services extend considerably further. A team of 42 dedicated, highly skilled professionals, the majority of which are Bahrainis, operate and provide support for a full range of technology systems from BENEFIT’s offices in Central Manama. Together, they facilitate financial services across the Kingdom. From the Electronic Payment Gateway, which enables financial institutions and their Merchants to process online transactions, to the management of Bahrain’s only Credit Reference Bureau, the industry relies heavily on BENEFIT to bolster the country’s position as a heavyweight financial hub in the region.

Providing the only shared, technology-led, business platform for banks in Bahrain, BENEFIT adds value for its shareholders, member banks, financial and non-financial clients. Effectively enabling them to provide convenient services, reduce risk and manage incumbent costs more effectively and efficiently.

BENEFIT aims to enhance the experience for individual

customers indirectly with convenient and reliable systems. Systems which allow them to pay with their debit cards at the Point of Sale, pay bills on-line, set up Direct Debit facilities and manage banking needs through an Internet Banking platform shared by banks and their customers.

BENEFIT’s services have recently been extended further to include a joint venture, SINNAD, which provides third party ATM and card processing services for the Gulf Corporation Council (GCC) countries. The SINNAD initiative has opened the door for BENEFIT to expand into new business lines that complement its core business and move beyond Bahrain’s borders.

The GCCNet dispute service is one such example of this move towards providing comprehensive service offerings in the banking industry. Overseeing the ‘GCCNet Dispute Management System’, BENEFIT has the sole responsibility for the processing of all customer disputes with banks across the entirety of the GCC. Constantly evolving, forever improving, BENEFIT has established itself as the indispensable nerve centre of Bahrain’s Financial Services Industry, laying the foundations for expansion into the GCC and beyond.

CHAIRMAN’S STATEMENT

I think everyone in the financial industry will agree that it has been one of the most challenging years we have ever seen.

Despite this, I’m pleased to announce that BENEFIT has seen significant and substantial growth of 20% in 2009.

As a result, it feels an appropriate time to publish our first Annual Report.

Abdul Razak A.Hassan Al Qassim Chairman - NBB, CEO and Board Member

06 | 07 BENEFIT ANNUAL REPORT 2009 | MANAGEMENT REPORT

A Challenging but significant

Year of growth At the beginning of 2008 we set out a three year strategy of moving forward while staying committed to our shareholders and customers. A two-fold strategy, which we achieved by enhancing our current services and introducing several new offerings. Some of these services are fully active as 2009 comes to a close, while others are at the final stages, giving us a lot to look forward to in 2010.

Through the strong and solid support of our members and a highly knowledgeable and dedicated team of employees, BENEFIT has continued to improve the quality of its services. Our current Direct Debit, POS, ATM, gateway and telecom payment systems have all seen the positive effect of innovative advancements.

BENEFIT’s CRB has gained considerable momentum with the help of team expansion and technology expertise, which has enhanced the CRB Services to include the scorecard this year. The establishment of our joint venture, SINNAD in January 2009, which have successfully acquired 5 member banks, and led us into previously untapped markets, helping us to extend BENEFITís network into the international marketplace.

The development of an Internet Banking Application Service Provider, the GCCNet Dispute Management System, and member bank EMV certification has further secured our position as a technology enabler at the heart of the financial market in Bahrain and the region.

1. Our Telecoms bill payment service enables customers to settle bills with their debit cards online or through other electronic channels. The Direct Debit facility has further extended our offering.

BENEFIT has, indirectly experienced some shockwaves as a result of the crisis; however I am pleased to announce that they have not affected our growth and strategy objectives. We continued to launch steady services and enhance our existing offerings by providing financial institutions cost effective and efficient systems, allowing them to offer convenient services to their customers.

I would like to extend my gratitude to the BENEFIT team, our shareholders, clients and the CBB for their dedication, support and trust, which has ensured growth in 2009. The first seeds have been sown for a bright future and BENEFIT’s establishment as the clearing house and financial transaction hub of Bahrain and the GCC.

CEO STATEMENT

We’ve come a long way at BENEFIT since we were first established back in 1997, so it’s the perfect time to reflect on a successful journey and look ahead to a promising future.

Abdulwahid Janahi Chief Executive Officer

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Reflecting on past

successes and looking forward

to a Bright Future

Our mission from the start has been to be the leading technology enabler for financial payments in Bahrain, not only facilitating such systems, but constantly adding value for our shareholders, financial institutions, and clients. By improving cost and time efficiencies, these services ultimately provide convenient services to the end consumer. Our team of skilled, Bahraini professionals has helped us to build an indispensable business platform that is shared with all of Bahrain’s banks, financial and non-financial institutions. A team

that is constantly developing and supporting the technology systems required for effective transaction processing and management of risk. Originally set up as a government run organization, with the sole responsibility of providing ancillary services for Bahrain’s financial institutions, we have continually developed and strengthened our services portfolio.

Profits generated are heavily re-invested back into the company so that BENEFIT can continue paving the way and maintain its position at the forefront of creating innovative, cutting edge solutions that add value and generate success for all of our clients. BENEFIT is embedded at the epicentre of the financial industry in Bahrain, steadfast in the foundations on which it grows and we have made headway beyond even our own expectations and challenging targets in 2009.

One of the greatest achievements of the year has been the establishment of joint venture SINNAD, which has helped to lay the groundwork in positioning BENEFIT as the hub of financial services technology on a regionwide basis.

2. The Electronic Payment Gateway allows companies and Government bodies to process their customers’ transactions in real time through electronic channels.

For the financial industry and the larger global economy, 2009 has been a challenge to say the least. This is a year when the financial landscape has been altered irrevocably. Banks and financial institutions have been at the forefront of the crisis and have had to work harder on their image in society. BENEFIT has helped our member banks and institutions through this crisis by continuing to add value and help them manage risks, significantly reducing their costs and helping them to maintain their customer loyalty.

These measures and more have helped us to hold on to our ISO security certificate in 27001 and achieve a significant rate of growth in turbulent market conditions.

BENEFIT has helped its shareholders and member banks weather the storm by providing a platform of security to help them reduce expenditure and serve their customers better. As 2009 comes to a close, I’m looking forward to a bright 2010.

BOARD OF DIRECTORS

a

d e

010 | 11 BENEFIT ANNUAL REPORT 2009 | board of directors

c

f

Corporate Heart

b

k

i

h

j

g G

A) Abdul Razak A.Hassan Al Qassim Chairman - NBB, CEO and Board Member B) Reyadh Sater Vice Chairman - BBK. GM of Support C) Abdul Aziz Al Ahmed Director - NBB. EAGM, Marketing & Sales D) Abdulla Hussain Director - NBB, EAGM, Customer Services Group

E) Abdul Razaq Abdul Khaliq Director - BISB, Assistant General Manager Central Operations F) B. Chandrasekhar Director - SCHB, Head of Consumer Banking G) G.P.V. Rao Director - AUB, Group Head of Technology, Financial Services H) Hana Sarwani Director - HSBC, Chief Operating Officer

i) Kaashi Banerjee Director - BSB, Head - Operations & Support J) Mohammed Malik Director - CREDIMAX, CEO K) Yousif Al Fadhel Director - CBB, Director, IT Directorate

Corporate Heart

A constantly

evolving platform of

indispensible, exclusive

services

Sitting at the core of BENEFIT’s business is its role as the National Switch and Credit Reference Bureau of Bahrain. Its enviable position and high level of Bahraini expertise has furnished BENEFIT with the tools required to develop and enable an electronic transaction network and credit reference bureau that not only adds value for its shareholders, member banks, nonfinancial members and customers, but also makes it an indispensable presence in empowering Bahrain to become the financial hub of the region.

From providing the National Switch in the Kingdom, BENEFIT extended its network to Point of Sale and linked into the GCC market’s network as a whole.

Learning the effectiveness of electronic payment technology, BENEFIT expanded its capabilities further to encompass Direct Debit, on line bill payments and a fully operational electronic payment gateway. A bank of knowledge has been built through the supply of these services, paving the way for BENEFIT to develop its Internet Banking solutions and Bahrain’s only Credit Reference Bureau. This has consolidated BENEFIT’s

012 | 13 BENEFIT ANNUAL REPORT 2009 | Corporate heart

position as the exclusive facilitator of a cost efficient transaction technology network in Bahrain.

Each of BENEFIT’s new and existing services combine to create a business support platform for financial and non-financial organizations, which supplies more efficient electronic payment, fund transfer, risk management, internet banking and business out source solutions. This allows shareholders, member banks and organizations to reap increased value while their customers benefit from more convenient services.

The National Switch not only encompasses the Switch service for more than 350 ATMS across Bahrain, it also enables more than 8,000 Point of Sale (POS) terminals in stores all over the Kingdom. This allows any customer with a BENEFIT enabled ATM card to pay for goods at the point of purchase with their debit card. Moving into the future, the major segment of market growth is in high speed online transactions and electronic funds transfers. This means online payment is growing in popularity and has become a requisite service for

many organizations. As the sole body responsible for the National Switch, BENEFIT had the tools required to expand into this crucial sector.

The Electronic Payment Gateway allows companies and Government bodies to process their customers’ online transactions in real time through the use of their debit or credit cards, whilst the Direct Debit facility gives bill originators the potential to collect multiple payments at once, cutting costs and streamlining systems. Every type of company and organization from schools to insurance brokers can benefit from this faster, more flexible and more reliable means of transaction processing or bulk payment collection, as well as reducing their operating costs. Direct Debit services also derive a benefit for the bill originator’s partner bank. BENEFIT has extended its’ services further to link Telecom operators to the network with a system that allows customers to instantly settle their telephone bills over various electronic channels, from kiosks, to internet to their mobile handsets.

Corporate Heart

3. Benefit’s network of POS terminals allows consumers to pay for goods and services with their debit card at Point of Sales throughout Bahrain.

Risk Management and process outsourcing are areas that banks are becoming more attuned to in the wake of the credit crisis that shook the global business world to its core. Banks need to be more risk and cost aware to stay ahead in a difficult marketplace. BENEFIT provides the only Credit Reference Bureau (CRB) in Bahrain, helping banks manage risk by obtaining the credit background of each of their customers before approving a loan or overdraft. With over 200,000 records, the database is rich with information about customers who have had some form of credit in the past. This gives the banks the reassurance they need to grant loan applications during these challenging times. As well as providing support, the CRB is constantly developing the service at the customer side of the credit application. By designing new and efficient ways for banks to use the service in the back office, the effectiveness of each decision can be improved through a more thorough knowledge of the customer’s credit background in each case. BENEFIT has recently extended its CRB facility further to allow

banks to measure their institution’s level of risk against the country risk, providing keener foresight of problem areas they are likely to encounter with their customers.

The CRB is also looking at ways the consumers can access their personal credit records and improve their credit rating, thus providing a benefit to the community as a whole.

Internet banking has become the first choice for many consumers, classed as the most time efficient, hassle free way of doing banking in today’s fast paced society.

BENEFIT develops and maintains bespoke and secure internet banking solutions as an out sourced service for banks, serving to reduce the overheads involved in developing their own system. The only Application Service Provider (ASP) of bespoke internet banking solutions in the region, BENEFIT uses state-of-theart technology to design an interface that embodies extensive, easy to use functionalities for customers and the bank’s back office. Such an ASP has become the first choice of more and more banks in a time when cost, risk and manpower efficiencies are vital.

Beyond our borders, BENEFIT has extended its shared business platform to the GCC as the host of the ‘GCCNet dispute System’ making it the focal point for all interbank disputes in the GCC region. Through this system, all commercial banks in Bahrain, Kuwait, Qatar, United Arab Emirates, Oman and Saudi Arabia can raise and settle customer dispute claims across GCC countries online; ensuring a fast, efficient and cost effective resolution for all parties involved.

Furthermore; this year has seen the establishment of the joint venture SINNAD as a third party processing and outsourcing partner. This is a crucial turning point that allows BENEFIT to penetrate deeper into regional markets. SINNAD has enabled BENEFIT’s expansion outside of Bahrain towards a leading position as the sole facilitator of electronic payment, fund transfer, risk management and

Corporate Heart

Ahmed Shawqi Club Junior Administrator

Mahmood Al Asheeri Data Audit & Systems Controller(CRB)

Jalal Al Ammar Customer Service Administrator

Saud A.Aziz Data Audit and Systems Admnistrator (CRB)

Amira Al Bastaki Customer Service Controller (CRB)

Robin Watson Assistant General Manager(CRB)

014 | 15 BENEFIT ANNUAL REPORT 2009 | MANAGEMENT Team

Hessa Ali Hussain Supervisor (CRB)

Corporate Heart

Accomplishment built through market

knowledge

business process outsourcing in the region as a whole.

Constantly researching and developing, BENEFIT makes significant investment each year to enhance and embed the latest, most innovative technologies for communications and its service business platform.

This investment ensures that all of its services offer the highest level of quality, efficiency and security.

Most recently BENEFIT has enabled cutting edge EMV technology, which certifies its members as per international EMV standards. This will ensure safe and secure banking for Bahrain’s residents by licensing banks to migrate from traditional magnetic strip debit

The true backbone of BENEFIT’s services lies in its team of experienced local professionals, made up of 42 experts in IT, new product development, finance and customer services. Not only are systems set in place for our customers, they are supported and serviced around the clock by highly skilled operational professionals. Such a team of dedicated personnel is essential to maintaining BENEFIT’s shared business platform. They ensure that value is added for its shareholders, member banks, and financial and non-financial customers at every juncture and are instrumental in cultivating BENEFIT’s leading position as the sole provider of an efficient financial technology network in Bahrain.

BENEFIT’s Role

The Backbone of

Bahrain’s

Financial Industry BENEFIT is the anchor at the very heart of Bahrain’s business environment. Rooted at the centre of the financial landscape, it provides an electronic network that is fundamental to the prosperity of Bahrain’s economy and its establishment as the financial hub of the GCC. Although BENEFIT was set up initially as part of a government body, it now operates as a privately owned entity, albeit with a focus on services rather than profits. Profits go largely back into research and development and ancillary support services, and are invested to ensure BENEFIT’s IT infrastructure stays ahead of the market place. Such investment from profits is essential; not only to maintain and increase value for its shareholders and member banks, but also to guarantee Bahrain stays ahead in terms of economic and financial prowess.

As well as giving the banking industry and other nonfinancial institutions the systems they require to thrive through the provision of cost, risk and time efficiencies,

Adel Salem AGM Business Support

016 | 17 BENEFIT ANNUAL REPORT 2009 | Benefit’s role

BENEFIT’s services indirectly makes life more convenient for the people of Bahrain and those further afield. It’s an organisation that works for the prosperity of the banking industry, enabling them to save costs, lower risk and operate efficiently. Renowned for its expertise and unbiased approach in business as the National Switch, Credit Reference Bureau and other core electronic banking services, BENEFIT has built a reputation based on trust and reliability. Being awarded ISO security and quality standard certificate 27001, has further reiterated its position as the exclusive provider of high quality, reliable ancillary services to the financial industry. Keeping resources to a minimum so that all profits can be concentrated on the development and support of its core services, it has been vital for BENEFIT to recruit only the most experienced and most highly skilled team, the majority of whom are local Bahraini’s. Using local talent and know-how is demonstrative of the acknowledgement of BENEFIT’s Bahraini heritage and provides it with the opportunity to give something back to the community.

Ahmed Mandi Accounts Clerk

Bader Abdulla Copmuter operator

Ramzi Ebrahim Senior Computer Operator

Farooq Al Kooheji Accounts Clerk

Hussain Abdulla Database Administrator

Fatima Ebrahim System Administrator

Deena Qamar Al zaman Admiistrative Clerk & HR assistance

Hayfa Buhsayen Financial Controller

Hamad Mohd Jaafer System Administrator

Mona Zainal Application& System Administration

Mirza Al Sharqi IT Administrator

Mariam Al Nasser System Administreator

Hassan Al Mutawa Assistant Manager IT

Zainab Shukralla Manager IT- Systems & Application

Masooma Al Shoala Supervisor IT- System & Application

Nawaf Al Abbasi Assistant Manager Operation

Mustafa Fuad Messenger

Adel Rasheed Computer Operator

Ahmed Hussain Network and security Officer

Manooj (Manjunadhan Miniswamy) Office Boy

Hussain Sultan Computer Operator

Adel Al Kooheji Officer , PR & General servicess

Mahmood Yousif Computer Operator

Mohammed Musaiqer Programmer Analyst

Fahad Yousif Computer operator

Abbas Hilal Senior Computer Operator

Ahmed Janahi Computer Opereator

Ghazi Abdulla Senior Computer Operator

Corporate governance

A constantly

evolving platform of

indispensible, exclusive

services

Sitting at the core of BENEFIT’s business is its role as the National Switch and Credit Reference Bureau of Bahrain. Its enviable position and high level of Bahrainis expertise has furnished BENEFIT with the tools required to develop and enable an electronic transaction network and credit reference bureau that not only adds value for its shareholders, member banks, nonfinancial members and customers, but also makes it indispensable in empowering Bahrain to become the financial hub of the region.

From providing the National Switch in the Kingdom, BENEFIT extended its network to Point of Sale and linked into the GCC market’s network as a whole.

Learning the effectiveness of electronic payment technology, BENEFIT expanded its capabilities further to encompass Direct Debit, on line bill payments and a fully operational electronic payment gateway. A bank of knowledge was built through the supply of these services, paving the way for BENEFIT to develop its Internet Banking solutions and Bahrain’s only Credit Reference Bureau. This consolidated BENEFIT’s

018 | 03 BENEFIT ANNUAL REPORT 2009 |

position as the exclusive facilitator of cost efficient transaction technology network in Bahrain.

Each of BENEFIT’s new and existing services combine to create a business support platform for financial and non-financial organizations, which supplies more efficient electronic payment, fund transfer, risk management, internet banking and business out source solutions. This allows shareholders, member banks and organizations to reap increased value while their customers benefit from more convenient services.

The National Switch service not only encompasses the Switch service for more than 350 ATMS across Bahrain, it also enables more than 8,000 Point of Sale (POS) terminals in stores all over the Kingdom. This allows any customer with a BENEFIT enabled ATM card to pay for goods at the point of purchase with their Debit card. Moving into the future the major segment of market growth is in high speed online transactions and electronic funds transfers. This means of payment

Corporate governance

Nawaf Al Bardooli Business Development Administrator Yousif Al Nefaiei AGM Business Development

Ahmed Al Mahri Officer, Business Development