SYLLABUS OVERVIEW - retailbanking-academy.org€¦ · SYLLABUS OVERVIEW Certified Retail ......

SYLLABUS OVERVIEW

Certified Retail Banker qualification

www.retailbanking-academy.org

CONTENTS

Retail Banking I Retail Banking II Retail Banking III

Module 101: BUSINESS ETHICS AND COMPLIANCE

Module 102: RETAIL BANKING OVERVIEW

Module 103: PRODUCTS

Module 104: CHANNELS

Module 105: MARKETING Module 106: EFFECTIVE SALES MANAGEMENT

Module 107: CUSTOMER SERVICE QUALITY

Module 108: OPERATIONS

Module 109: CREDIT AND LENDING

Module 110: RELATIONSHIP MANAGEMENT

Module 201: DIGITAL MARKETING

Module 202: PRODUCT PORTFOLIO MANAGEMENT Module 203: SME LENDING

Module 204: PEOPLE MANAGEMENT

Module 205: CUSTOMER CARE

Module 206: PERFORMANCE MANAGEMENT

Module 207: WEALTH MANAGEMENT

Module 208: BALANCE SHEET MANAGEMENT Module 209: RISK MANAGEMENT

Module 210: FINANCIAL MANAGEMENT

Module 301: LEADERSHIP IN RETAIL BANKING

Module 302: BUSINESS STRATEGIES FOR RETAIL BANKING

Module 303: BRAND MANAGEMENT

Module 304: GOVERNANCE

Module 305: OPERATIONAL EXCELLENCE

Module 306: RISK AND CAPITAL MANAGEMENT

CRB Prospectus / 2

BUSINESS ETHICS AND COMPLIANCE

This module deals with business ethics and compliance. Specifically, it considers the moral principles underlying business ethics where motives matter most when the bank adopts a customer-centric strategy. It also establishes a link between business ethics and customer trust, which is a determinant of customer loyalty.

The module also deals with the separation of ownership (shareholders) and control (managers) and the resulting information asymmetry which provides an opportunity for managers to pursue self-interest objectives. This creates agency costs for shareholders. Unlike non-financial firms, there is a complex web of agency relationships in retail banks which requires an ethical bank culture that provides a moral compass for all employees.

Finally, sources of compliance risk that include data security, money laundering and terrorist financing are identified, while the crucial role of the compliance department is highlighted in relation to its obligation to identify sources of compliance risk; take actions to mitigate these risks; and provide timely reporting on compliance lapses to senior management and the bank board.

After completing this module you will be able to:

• give definitions on morality and ethics,

and distinguish between ethical models

based on motives, behaviors and

consequences.

• identify an appropriate ethical model for

customer-centric retail banking.

• apply this model to recommend

appropriate courses of action in retail

banking when faced with choosing

between ‘right and wrong’ and between

‘right and right’.

• explain how business ethics encourage

trust, and so improve financial

performance.

• analyse the principal–agent relationships

between different external stakeholders

in retail banks and the managers, and

explain the role of organisational culture in

preventing misuse of these relationships.

• define compliance and explain the role of

the compliance function in retail banks,

including mitigating risks of laundering

money and financing terrorism.

• describe the impact on customers of

ethical breaches in retail banking, and

recommend what could be appropriate

remedial actions.

MODULE 101

“A separated, independent retail banking sector should be led by professionally qualified retail bankers, bound by an ethical code similar to those already in place for accountants and lawyers.”

Evidence Submission from the Retail Banking Academy

CRB Prospectus / 3

• explain how retail banks function to

deliver financial intermediation, support

asset transformation and create money

supply.

• describe the sources of risk that a retail

bank manages in delivering these

functions for customers and the wider

economy.

• describe the core services of a retail bank

and explain the value of these services to

customers.

• explain liabilities on a retail bank’s balance

sheet and their associated risks, including

core deposits, interbank funding,

certificates of deposit, repurchase

agreements and unsecured debt.

• explain assets on a retail bank’s balance

sheet and their associated risks, including

cash and cash equivalents, loan products

in the trading book and banking book,

mortgages, investments in bonds and

mortgage-backed securities, goodwill and

fixed assets.

• calculate and interpret retail banking

ratios from information in the balance

sheet and income statement, including

the cost income ratio, the loan to deposit

ratio, the net interest margin and spread,

the return on equity and assets, and the

leverage ratio.


This module covers an extensive overview of retail banking, from viewing banks as financial intermediaries to considering the roles that a retail bank serves in the real economy.

We also consider the typical sources of funding (i.e., the liability side of the balance sheet) that include retail deposits and wholesale funding. Later, we consider the asset side of the balance sheet that includes products and the risks embedded in the banking book and trading book. Next, we present an analysis of the income statement showing that net interest margin is the main source of income for a retail bank.

We also show, as is typical for any people business, that staff costs dominate operating costs. Finally, the module concludes with the calculation of common retail banking metrics such as net interest margin (NIM), net interest spread (NIS), return on equity (ROE) and cost income ratio (CIR).

RETAIL BANKING OVERVIEWMODULE 102

“What you have to do is understand the consumer, understand that there is a life cycle in terms of consumer needs. These needs are universal. There is nothing that I learned that suggested that they were local to any one country. It is the same basic business. It is a solid business.”

John Reed, former Chairman and CEO, Citibank

CRB Prospectus / 4

In this module we review the reasons why customers demand services and products, linking the product/service to the usage. New forms of payment emanating from the development of the smartphone are also identified. We introduce the family life cycle and note the types of products demanded at each stage, making the point that this is a moving feast in the modern world.

We consider how savings and loan products may be priced relative to a benchmark rate. We then move on to discuss the traditional product development and approval process before considering the significant ‘disruption’ being evidenced through the emergence of FinTech and the resultant trends in product development, highlighting that innovation and pace of delivery are now all-consuming and critical when bringing banking products to market.

Finally, we consider product development in the digital age, noting four areas of innovation, and conclude by identifying eight levels of payments innovation vying for a share of the customer wallet.


• identify and understand the core and

unique attributes of financial services in

retail banking.

• differentiate between banking products

that enable customers to make payments,

save, borrow, invest and conduct cash

management.

• relate customers’ demand for banking

products and services to the family life

stages of wealth accumulation, wealth

consolidation and wealth transfer.

• calculate and understand the

fundamentals of pricing of loans and

savings deposits.

• describe how FinTech startups are

unbundling the traditional retail banking

value proposition, and suggest strategies

by which retail banks might respond.

• describe the 4Ps process of digital

product development in a retail bank,

including ‘pretotyping’, and explain its

rationale.

• describe the ‘15 Percent Rule’ to

determine the optimal rollout timing for

innovative banking products, and explain

its rationale.

• evaluate the potential advantages and

disadvantages of creating Banking

Innovation Labs by reference to global

best practices.

• explain how ‘intrapreneurship’ can help

to retain creative, entrepreneurial talent

within a traditional retail bank.

• categorise digital product innovation sub-

areas within banking into four overarching

groups: emerging payments, personalised

products and interfaces, better loans, and

easier access.

• analyse the threat to retail banks of falling

behind FinTech startups, Tech Giants

and Mobile Network operators in terms

of innovation, by reference to cutting-

edge payments innovations and their

technologic backgrounds.

PRODUCTSMODULE 103

“A holistic view of the entire retail operation is key for any passionate retail banker, and that is exactly what this course offers.”

Nedbank Associate member, South Africa

CRB Prospectus / 5

• describe the evolution of channels in retail

banking.

• explain the role of branch banking in the

digital age, describing, from a bank’s

perspective, alternative ideas for branch

formats that retail banks are developing

globally.

• analyse the challenges retail banks face in

trying to exert a degree of control in the

mobile banking market.

• identify the multiple functionalities of

the smartphone as the primary banking

channel of the future and describe other

digital channel innovations that are

emerging.

• describe the changing requirements and

usage of bank channels from the customer

perspective, identifying customers’

preferred solutions when facing

information risk.

• define the digital ecosystem and describe

the opportunities and threats that retail

banks face as they position themselves

within it.

• analyse the implications of the digital

ecosystem for data management,

protection and usage in retail banking.


This module starts by looking at some of the major shifts and trends that have taken place in retail banking channels before moving on to uncover more about the changing nature of the multi-channel customer. We examine four key principles at the heart of omni-channel banking, while considering a strategy that strikes the right balance between automation and the human touch.

We explore the digital ecosystem, the role of the branch network and the growing theme of channel convergence as banks look to support the growth of digital sales through meshing together the different channel experiences of customers in attractive and relevant ways.

Finally, we look at implications for data management. Retail Banks hold vast amounts of data which, together with their enhanced processing power, provide the opportunity to make better, faster and more personalised decisions about lending to individuals and businesses.

“Retail banking requires a special set of skills – giving it a professional status will give retail bankers more credibility and status within their organisation.”

Dick Harryvan, former CEO ING Direct

CHANNELSMODULE 104

CRB Prospectus / 6

In this module we explore a range of topics that will provide you with a good understanding of marketing within the context of retail banking.

First, we take a look at the changing nature of marketing, particularly how things have evolved over the last few years. It is apparent that the financial services sector is not immune to disruption as the rising Fintech movement gains pace.

We then look at how we define a business vision and mission within an organisation. Within the context of retail banking, the need to communicate a clear vision and purpose to one’s customers is becoming increasingly important, particularly as customer relationships in many geographies have suffered due to a lack of trust between the customer and their bank.We go on to explore the marketing mix and see how it has changed over time. The addition of People to the traditional 4P model is quite important in retail banking – which is truly a people business. It is clear that Price, Product, Place and Promotion can be replicated by a competitor in retail banking. But people make the difference, since their unique skills of professionalism are not easy to replicate.

We determine the key methods used to understand customers and digital marketing opportunities by evaluating some of the latest tools and techniques in this area. Finally, we look at data management before considering financial education and inclusion.


• define the marketing function, and

describe how it has been impacted

by recent changes in the market

environment, demographics, social

behaviour and technology.

• compare different models of the

marketing mix in terms of their relevance

to retail banking, including:

McCarthy’s 4P model

Lauterborn’s 4C model

a combined 4C+P model

additional factors arising from digital

.............. innovation.

• compare different models of buyer

decision making in terms of their

relevance to retail banking, including

Kotler’s typology of buyers’ ..........

...............behaviours

the stimulus-response model

..............Johnston’s 5 stages of buying

• analyse the challenges faced by retail

banks in making use of existing customer

data, and recommend strategies to

address these challenges.

• describe appropriate qualitative

and quantitative customer research

techniques, taking advantage where

appropriate of new digital channels.

• outline how to apply the marketing

process in the context of retail banking,

including the distinct stages of analysis,

strategy, planning, execution and control,

and evaluate the impact of digital

innovation on each of these stages.

• outline the social and commercial

benefits of improving financial inclusion,

and suggest ways in which financial

technology can help to deliver these

benefits.

“Congratulations on this initiative. It is badly needed in our industry.”

Executive Director of Acquiring and Strategic Initiatives, Russian Standard Bank, Russia

MARKETINGMODULE 105

CRB Prospectus / 7

• characterise an effective sale in the

context of retail banking, and analyse

how effective and less effective sales will

impact on the retail bank’s relationship

marketing.

• describe the Seven Step Sales Process

and explain how it can be applied to

increase the value of sales, both to

customers and to the retail bank.

• describe how to appraise the effectiveness

of salespeople, using a Balanced Sales

Performance Scorecard and related key

performance indicators (KPIs).

• describe how to apply the GROW (Goal,

Reality, Options and Will) model in

coaching salespeople.

• outline the responsibilities associated with

the role of Sales Manager in a retail bank,

and describe how these responsibilities

can be addressed, including the use

of individual performance plans for

salespeople who are underperforming.

• identify risks to clients and staff of retail

banks, and to the banks themselves, that

can arise from prioritisation of unrealistic

sales targets, drawing on analysis of the

Wells Fargo Fake Accounts Scandal.

• suggest specific sales strategies for

digitally innovative services, drawing on

the theory of information cascades and

recent initiatives to overcome resistance

to onboarding.


This module examines the importance of maintaining a disciplined sales process in order to facilitate effective sales management through the introduction of the Seven Steps Sales Process, the component parts of which we describe in detail.

Next, we present the Sales Performance Scorecard, adapting Kaplan and Norton’s Balanced Scorecard for retail bankers and building the links to individual performance and development plans. Successful implementation should result in improved processes, better educated and more competent staff, increased sales to customers (based on their needs) and greater customer satisfaction.

We go on to consider the skills crucial to the role of the Retail Banking Sales Manager in delivering effective sales management, with a particular focus on the practical application.

Finally, we evaluate the significant impact of digital, such as ‘Selling the UX’ and the ‘Network Effect’.

“Preliminary work to establish a professional body should begin immediately as a demonstration that commitment to high standards is expected throughout banking and that individuals are expected to abide by higher standards than those that can be enforced through regulation alone.”

Changing Banking for Good, published by the UK’s Parliamentary Commission on Banking Standards

EFFECTIVE SALES MANAGEMENTMODULE 106

CRB Prospectus / 8

This module begins with a brief historical account of customer service quality in retail industries such as hospitality, aviation and retail banking. We then consider the antecedents of customer service quality, such as core dimension (reliability) and four others – tangibles, assurance, empathy and responsiveness. We cite several academic and professional references that have supported the choice of these five drivers of customer service quality. We then consider the important link between customer service quality and customer satisfaction.

Finally, from the perspective of a successful cross-selling strategy, we consider the link between customer satisfaction and customer loyalty. We present several research studies that support the proposition that customer satisfaction leads to customer loyalty. We consider how retail banking executives should resolve customer service failures via a Gaps model and discuss the so-called ‘service recovery paradox’. We conclude that the most important recommendation for retail banking executives is to strive for error-free and better-than-expected service the first time.


• describe the historical evolution of

customer service quality as a key

differentiator, using examples such as

Amazon.com, Singapore Airlines and

Umpqua Bank.

• explain how customer service quality is

driven by the dimensions of reliability,

responsiveness, assurance, tangibles and

empathy (Parasuraman et al.’s R-RATE

model).

• analyse the links between customer

service quality, customer satisfaction

(defined in terms of customers’

perceptions and expectations) and

customer loyalty.

• describe how to apply the Gaps model

(or Distances model) to assess defects in

customer service quality and to resolve

customer service failures.

• calculate Net Promoter Scores (NPS)

and Service Quality Metrics (SQM), and

evaluate their usefulness and deficiencies

in measuring customer satisfaction.

“It is essential to have a professional certificate in retail banking.”

Head of Competitive Intelligence, Itaú Unibanco, Brazil

CUSTOMER SERVICE QUALITYMODULE 107

CRB Prospectus / 9

• describe the challenges faced by retail

banks in making use of existing customer

data, and suggest strategies to address

these challenges.

• characterise the operations of a retail

bank’s front, middle and back offices

in terms of operations, processes and

functions.

• describe how retail banking processes can

be optimised by applying lessons from:

queuing theory, including Little’s

Law, the law of non-value-added

activity and its relationship to

complexity, and the Pareto principle

Lean Six Sigma approaches to

process efficiency, including the

importance of talent management

the theory of constraints and its

application in resolving bottlenecks.

• describe how the customer experience

can be optimised by applying lessons

from:

the theory of waiting time, including

the peak-end rule, end-of-wait

experience, and the appointment

syndrome

flexible and timely resource

planning, applied to the

management of branches and call

centres.

• outline how to manage change by

applying the 3D model of IT project

management, including:

planning change by reference to the

iron triangle of budget, schedule and

scope

monitoring progress by simple

Earned Value Analysis, utilising the

Earned Value Method.

• describe the operational challenges

introduced by digital disruption across

a retail bank’s front, middle and back

offices.


We begin this module by focusing on the activities carried out in the front, middle and back office. These are viewed holistically, as the activities carried out in each function form part of the complete operation from both a risk and customer service perspective. We present a practical example of how the activities of each office work collectively in the deposit gathering process. We then identify the importance of optimising bank processes in terms of process efficiency through introducing the findings in operations management that possess empirical regularity. These are most useful for management when seeking to reduce operational costs (OPEX) and improve the cost income ratio (CIR) as well as improving the customer experience. Next we define operations using three essential properties: predictability, transparency and measurability. We then consider the concept of lean principles in the reduction of complexity in banking process through process simplification. This module then examines and proposes solutions to process bottlenecks through value-stream mapping, and concludes by revisiting the importance of viewing banking processes from an end-to-end perspective, being constrained by the weakest link. We then turn to the application of queuing theory solutions. This part of operations is of sensory importance to customers, and execution is vital both in terms of satisfaction and advocacy (in both branch and call centres).

Finally, we introduce the three-stage model of project management, noting that modern retail banking is highly technologically dependent. Efficient and effective IT project management is an enabler in optimising bank branch, call centre and digital operations.

“Congratulations on producing such an educational and inspiring programme put together by experienced professionals.”

Credit Division, Millennium bcp, Portugal

OPERATIONS MODULE 108

CRB Prospectus / 10

“Clearly this is more than just an academic or ordinary training programme, but rather more practical and focused on the issues we face as a retail bank.”

Executive Manager – Consumer Banking, Gulf Bank, Kuwait

This module distinguishes between credit risk, market risk and operational risk, and explains the dominant role of credit risk in retail banking. It describes the difference between risk and (Knightian) uncertainty, and analyses the implications for effective risk management.

It evaluates the role of the law of large numbers in credit risk management. It analyses the usefulness and limitations of the default mode model and the mark-to-market model in managing credit risk. It applies the mark-to-market model to evaluate the main issues in credit loss management, including the net flow matrix of delinquent loans. It implements default risk dynamics and credit scores to predict credit risk, and compares the incurred loss model with the expected loss model of provisioning.


• explain how a retail bank’s risk strategy

interrelates with it business strategy, and

analyse the implications for the bank’s risk

department

• describe how a risk framework based on

identification of risk owners, establishment

of policies and procedures, and internal

audit can be used to address liquidity risk,

capital risk, credit risk, operational risk,

regulatory risk and legal risk

• distinguish between risk and uncertainty,

and explain the implications of the

distinction

• identify and interpret information

providing insight into risks associated

with credit applications for different retail

products including unsecured loans,

secured loans, credit cards, overdrafts, car

finance and consumer goods lending

• compare the merits of systems-based

decision-making and underwriter decision-

making on credit applications made

for the different retail products, and by

different banking channels including via

a branch, by telephone, online or via a

broker

• outline how credit applications can be

assessed by different affordability models

and by different types of credit scorecards

• identify and interpret information

providing insight into risks associated with

the different retail products once they are

on book

• apply metrics that can be used to monitor

arrears, and identify factors that will

influence whether an appropriate strategy

should be collection, restructuring,

recovery or write-off.

CREDIT AND LENDINGMODULE 109

CRB Prospectus / 11

• define relationship management as it

applies in the context of retail banking.

• explain the theory of relationship

exchange as the basis for relationship

management in retail banking,

distinguishing between episodic and

relational value.

• explain Habryn’s two-dimensional model

of customer intimacy, highlighting the

importance of bank adaptability and

the quality of the customer relationship

as the basis of trust in customer–bank

relationships.

• describe the components of customer

relationship management (CRM) as a

process, and analyse the expectations of

relationship customers.

• identify the roles of bank staff responsible

for creating high-quality customer

relationships in both the personal and

Small and Medium-sized Enterprise

(SME) sectors, and analyse the personal

attributes required of these staff.

• analyse the changing roles of channels in

delivering effective customer relationship

management (CRM) and their implications

for organisational structures, including:

forward-looking trends affecting such

systems

predictional-behavioural CRM

systems

differentiated value propositions

from different major CRM vendors.

• describe the transition from customer

relationship management (CRM) to

customer-managed relationships (CMR),

analyse the challenges this presents for

retail banks, and suggest how these

challenges might be addressed.


This module integrates several issues raised in the previous nine modules of Retail Banking I. Relationship Management is based on the creation of an optimal long-term bank–customer relationship that serves the long-term needs of the customer and, as a result, the long-term profitability of the bank.

In order to develop a model that will identify the drivers of a long-term customer–bank relationship, we define Customer Relationship Management (CRM) and its link to customer intimacy, positing the question about what customers may want from a relationship with their retail bank. We go on to examine Customer Relationship Management (CRM) through the lens of the bank staff whose role it is to deliver operational CRM. We then consider the role of the banking consultant and specialist advisor before identifying the equivalent roles for bank staff operating in the SME environment.

However, innovative channels raise an array of open questions in relation to CRM and relationship management in general. This module also considers the emerging Customer Managed Relationship (CMR), where the customer owns their personal information and the bank’s offerings are designed with the customer’s needs having priority.Trends in Customer Relationship Management (CRM) also consider the wide array of forward-looking incremental improvements in CRM. Current trends are making CRM systems more intelligent: providing a single client view, visional excellence, predictional-behavioural insights, third party and social media integration, voice enabled functions and more. We take a look at ten defining trends of innovation within CRM.

“Consumer banking considers the customer relationship as its only real asset. All other traditional assets or balance sheet items are manifestations of this relationship.”

Dr Stefan Kaminsky

RELATIONSHIP MANAGEMENTMODULE 110

CRB Prospectus / 12

Over the last decade, we have seen a continued and accelerating trend towards the digitisation of banks all around the world. From the way banks interact and communicate with their customers through to their propositions and operations, many are undergoing a significant digital transformation.

In addition, one has to look no further than the FinTech revolution to see how new entrants are adopting a digital-first philosophy in order to penetrate the market. Therefore, the importance of digital is clear in order for banks to create and maintain a competitive advantage in the future, which is the focus of this module.

In this module, we examine a number of the leading trends related to digital marketing and take a close look at the strategies banks – from all around the world – adopt in order to take advantage of the digital revolution.

We start by looking at the changing nature of the digital consumer and understand how they want to be serviced. Thereafter, we examine how to develop a digital strategy, particularly in light of the changing nature of the channel mix. We also explore the role of data and the opportunities that data creates for banks that harness it in a compelling way.

Finally, we look specifically at how to develop a social media strategy and the steps a bank needs to take to implement a successful measurement approach for all its digital marketing activities.


• explain the digital marketing life cycle,

including digital sales funnel, path to

purchase, and customer attribution in the

context of retail banking.

• explain the digital marketing mix,

including media, channels, relationship

management systems and communication

platforms, to meet customer expectations

in retail banking.

• apply a data-led approach to the analysis

of marketing information and platforms,

selecting appropriate analytical tools, and

recognising inherent uncertainties and

the limitations of financial and budgetary

requirements.

• assess the probable impact of different

content, ‘Calls to Action’ and user

journeys for different audiences and

online channels.

• describe the implications of ongoing

changes to the three pillars of the TASSC

model (Target Audience, Subjects,

Channels of Communication) for the

evolution of retail bank marketing

strategies

• compare and contrast pure versus

dominant versus partial digital marketing.

• identify characteristics specific to

Millennial customers, and evaluate specific

initiatives by which retail banks have been

trying to engage in novel ways with these

customers

• compare and contrast different key

digital market-research techniques such

as crowdsourcing, crowdstorming, social

listening, and video-focus groups.

“This course has by far exceeded my expectations and will equip me with all I need to be instrumental in building lasting bank brand

equity.”

Nedbank Associate Member, South Africa

DIGITAL MARKETINGMODULE 201

CRB Prospectus / 13

• apply the Boston Consulting Group

(BCG) Growth-Share Matrix to help

identify which products in a specified

portfolio should generate investment

funds, which should provide investment

opportunities, and which should possibly

be discontinued.

• recommend how to streamline a specified

product portfolio by identifying potential

value destroyers.

• identify, evaluate and apply relevant

market-related data to analyse the needs

of the Millennial segment, and outline

appropriate products to meet those

needs.

• apply an appropriate framework to inform

decision-making with regard to the

development of new products and the

enhancement of existing products.

• explain a bank’s new product approval

processes, and the actions required from

innovation to launch, then monitoring,

reporting and the ongoing customer ‘duty

of care’.


This module considers the fundamental issues involved in effective product portfolio management in retail banking. The product portfolio manager must conduct periodic evaluation of the bank’s current product portfolio so as to identify products that are redundant or are potential value-destroyers. Practical criteria by which to conduct this evaluation are presented.

After streamlining the product portfolio, the product manager is faced with two options: first, to create incremental value for existing products using appropriate marketing mix strategies; or second, to create a business case for the inclusion of new products in the portfolio.

For both new and existing products, this requires a robust new product approval process driven by a multidisciplinary team that examines key issues such as risk management, duty of care and financial feasibility. We introduce a number of matrixes in support of product development and decision-making process – from creation right through to launch, monitoring and reporting. This module also examines the Millennial segment, which is key to bank transformation and change management investment in the coming years. Understanding and planning for this new world is critical, as product portfolio management in the future will focus more and more on this segment.

“What you have to do is understand the consumer, understand that there is a life cycle in terms of consumer needs. These needs are universal. There is nothing that I learned that suggested that they were local to any one country. It is the same basic

business. It is a solid business.”


PRODUCT PORTFOLIO MANAGEMENTMODULE 202

CRB Prospectus / 14

This module utilises the 5Cs model augmented with the specific purpose of the loan as the basis for establishing the creditworthiness of prospective SME borrowers.

We present an SME lending risk scorecard that can be utilised by the loan officer during the screening process. This stage is typically followed by two sequential stages – contracting and monitoring. The contracting stage provides the mechanics of loan pricing. The price of the loan is adjusted by non-price terms and conditions so as to account for the specific risks of the borrower. These non-price terms and conditions, such as collateral requirement, loan amount, loan maturity and loan covenants also help the bank in the monitoring of credit risk after the loan is approved. This module also considers the credit risk evaluation procedure for unsecured loans. The special situation of SMEs that are new borrowers and have been in business for a short period of time is analysed. We also deal with the calculation of the expected loss with the realistic assumption that probability of default (PD) and loss given default (LGD) are correlated.

We also consider the implications of potential concentration risk in the bank’s loan portfolio. This lack of diversification arises from over-lending to a particular obligor, sector or geographical region and can lead to correlated default rates and unexpectedly high credit risk for the bank.

Finally, we provide an introduction to Crowdfunding – the emerging online channel in SME lending. We examine differences between forms of online lending and identify key risk factors associated with this exponentially growing area of financing.


• describe how the 5Cs model (character,

capacity, collateral, capital and conditions)

can be used as the basis for screening

prospective SME customers.

• analyse the information content of hard

and soft data obtained on loan applicants.

• calculate and interpret interest coverage

and total debt service ratios as well as

cash flow measures.

• create a lending scorecard that can be

used in the contractual and lending stages

for SME customers

• calculate loan rates based on Funds

Transfer Pricing (FTP) as well as markups

for credit and liquidity risks and

optionalities.

• recommend non-price conditions on loan

size, loan maturity and loan covenants

to mitigate risks in the loan monitoring

stage.

• compare methods to evaluate unsecured

loan applicants where SMEs have been in

business for less/more than three years.

• identify and evaluate the loan

concentration risk in a retail bank’s SME

loan portfolio.

• compare different types of online

lending including balance sheet lending,

marketplace lending, Peer to Peer

(P2P) lending and different types of

crowdfunding such as ‘product-oriented’,

‘equity-oriented’, ‘loan-oriented’ and

‘mixed’.

• evaluate key risks associated with

crowdfunding by reference to

standardised checklists.

“This course has by far exceeded my expectations and will equip me with all I need to be instrumental in building lasting bank brand

equity.”

Nedbank Associate Member, South Africa

SME LENDINGMODULE 203

CRB Prospectus / 15

• outline the Harvard model of HR

management

• compare the relevance to retail banks

of the Harvard model and the Resource-

based View (RBV) approach to people

management which proposes that

employee skills and expertise are the

bank’s predominant source of competitive

advantage.

• analyse how a retail bank’s HR Department

can affect the bank’s profitability

through actions that promote employee

engagement, knowledge management,

and relational capital

• identify the three main drivers of

employee engagement and analyse how

different HR policies will enhance or

detract from these drivers

• analyse content-based and process-based

theories of motivation, and evaluate

the design of compensation and reward

systems in relation to motivating, retaining

and engaging employees.


This module emphasises that People Management is based on the Resource-Based View (RBV) of the firm. It also considers the effects of moral hazard that manifests from the principal-agent problem arising from the separation of control and ownership. We consider how to design compensation and reward systems to achieve fair and just rewards for effort at the individual level to reduce the costs arising from agency relationships.

We show that effective people management can have a positive effect on the bank’s income statement. Employee engagement increases employee productivity and employee productivity increases economic profit and hence shareholder value creation.

“Retail banking requires a special set of skills – giving it a professional status will give retail bankers more credibility and status within their

organisation.”

Dick Harryvan, former CEO, ING Direct

PEOPLE MANAGEMENTMODULE 204

CRB Prospectus / 16

This module emphasises that customer care is an organisational commitment and a strategic objective. It is a customer-focused culture and a mindset that pervades the entire bank. While a consistent delivery of high quality customer service by the bank would likely create predictability from the perspective of the customer, it is only a first step. A caring relationship that delights the customer would also require fair treatment and mutual respect – all aspects of a trusting relationship. This relationship culminates in a passion for the bank with the customer becoming an advocate.

This module goes on to identify the actions that leadership in a retail bank should take to create a culture of customer care. We also consider a bank’s customer value proposition, and analyse the role of employee engagement in a culture of customer care. Finally, we discuss how to create and maintain trust in customer–bank interactions as well as methods for implementing a culture of customer care in retail banks.

This module considers how to promote customer satisfaction amongst Millennials via technology-based self-service delivery options where drivers of customer satisfaction differ from Baby Boomers. We conclude by building models that utilise the ‘digital lock-in effect’ to promote loyalty by examining digital customer care journeys and designing tactics around these.


• explain the role of customer service

excellence as a first step in creating a

bank’s culture of customer care.

• analyse the role of Human Resources

(HR) in customer care by the creation

of a common purpose, by facilitating

performance management through the

use of Key Performance Indicators (KPIs),

and by the management of talent

• explain how the 3Es model of bank staff

quality (ethical, educated and engaged)

can provide a dominant factor in creating

a culture of customer care.

• link appropriate KPIs with the bank’s

strategic objective of customer care, but

identifying the potential for unintended

consequences.

• explain the role of a dashboard of daily

service performance to demonstrate a

bank’s commitment to service excellence.

• identify the drivers of customer

satisfaction amongst Millennials.

• design tactics to utilise the ‘digital lock-in

effect’ to promote customer loyalty by

examining digital customer care journeys.

“Congratulations on this initiative. It is badly

needed in our industry.”

Executive Director of Acquiring and Strategic Initiatives, Russian Standard Bank, Russia

CUSTOMER CAREMODULE 205

CRB Prospectus / 17

• explain the fundamental role of

performance management in linking

a bank’s strategy with its strategic

objectives.

• calculate and evaluate Return on Equity

(ROE), economic profit and Risk-Adjusted

Return on Capital (RAROC) as measures of

long-term value creation in a bank.

• identify different issues involved in

evaluating a team’s performance

as compared with an individual’s

performance in isolation.

• determine how to keep Key Performance

Indicators (KPIs) to a minimum and related

to both results and behaviour, and identify

hidden traps in people performance.

• calculate and interpret profit margin,

which is determined by the Funds

Transfer Pricing (FTP) rate, customer rate,

operating cost and expected credit loss,

and evaluate the effect of FTP on RAROC.

• create balanced scorecards and

dashboards that can be used to evaluate

branch performance.


This module considers performance management and measurement in retail banks with special emphasis on the following topics:

• the relationship between performance management and long-term value creation

• various approaches for measuring performance and examples of key performance indicators (KPI’s) in retail banking

• goal setting and the key element of performance appraisals and the linkages to overall business and strategy plans

• methods for managing divisional performance where the key role of transfer pricing is emphasised and explained.

We demonstrate that transfer pricing has a direct bearing on the performance of divisions and business units where performance measurement must be guided by a limited number of KPIs that are based on results and behaviours. The Balanced Scorecard summarises the four key areas of emphasis when it comes to organisational performance.

Finally, we present a branch dashboard for a retail bank that serves to monitor performance as well as key considerations when managing performance in digital banking.

“Preliminary work to establish a professional body should begin immediately as a demonstration that commitment to high standards is expected throughout banking and that individuals are expected to abide by higher standards than those

that can be enforced through regulation alone.”

Changing Banking for Good, published by the UK’s Parliamentary Commission on Banking Standards

PERFORMANCE MANAGEMENTMODULE 206

CRB Prospectus / 18

This module covers lending, investment and insurance products that are required in the wealth accumulation phase of the private banking client.

We learn how to implement traditional tools to assess the private banking client’s degree of risk aversion. This is followed by a discussion of the typical risks – market risk and credit risk – faced by a private banking client in making lending and investment decisions.

This module also introduces and discusses the foundations of modern product portfolio theory that includes diversification methods, strategic asset allocation and measures of portfolio performance.


• explain the role of capital markets in

generating wealth over the long term.

• identify which lending, insurance and

investment products are required in the

wealth accumulation phase of a private

banking client.

• subjectively identify a client’s degree

of risk aversion through a suitable

questionnaire.

• recommend a diversified product portfolio

that includes diversification methods,

strategic asset allocation, and measures of

portfolio performance.

• explain the concepts of market risk, equity

risk and currency risk, and explain their

paramount role in investment decisions.

• describe the concept of WealthTech and

recognise key sub-areas.

• evaluate leading trends in financial

planning (FP).

• analyse the financial needs of affluent

Millennials.

“It is essential to have a professional certificate in

retail banking.”

Head of Competitive Intelligence, Itaú Unibanco, Brazil

WEALTH MANAGEMENTMODULE 207

CRB Prospectus / 19

• explain how information asymmetry leads

to balance sheet risks arising from adverse

selection and moral hazard

• explain how Basel 11 and 111 address

balance sheet risks, and their impact

on retail banks’ Return on Equity (ROE)

through the imposition of regulatory

capital requirements, liquidity standards

and constraints on leverage

• calculate, from information supplied,

capital allocations for credit risk

using the Standardised Approach, for

market risk using Value at Risk, and for

operational risk using both the Basic

Indicator Approach and the Standardised

Approach.

• explain the impact of interest rate

fluctuations on re-pricing risk, yield curve

risk, basis risk and options risk.

• calculate, from information supplied,

the interest-rate sensitivity of a retail

bank’s equity by applying the concept of

duration gap.


This module deals with issues of adverse selection and moral hazard that arise from the typical financial intermediation process. There is also a discussion of the capital allocation process (standardised approach) that is required under Basel III. We consider the risk weights for credit, operational and market risk as well as for securitised assets. We also introduce the fundamental properties of Macaulay distribution, which is a measure of interest rate risk. The impact of interest rate risk on the bank’s equity is conducted through a duration gap analysis.

The implication for the bank’s profitability while meeting the requirement of more and higher quality capital for the same level of risk, maximum asset-to-capital ratio (leverage ratio) as well as new liquidity standards is also highlighted.

“Clearly this is more than just an academic or ordinary training programme, but rather more practical and focused on the issues we face as a

retail bank.”

Executive Manager – Consumer Banking, Gulf Bank, Kuwait

BALANCE SHEET MANAGEMENTMODULE 208

CRB Prospectus / 20

Fundamental principles of risk and capital management are covered, and the following topics are emphasised: Risk and Uncertainty; Model Risk; Law of Large Numbers; and Basel Risks. We cover the measurement and management of credit risk. The concept of Value at Risk (VaR) is introduced and discussed in a non-technical fashion.Credit VaR is then discussed, and a critique of the main assumption of the standard default mode paradigm is presented. We then examine the measurement and management of operational risk with a review of the basic indicator and standard approaches, culminating with the Advanced Measurement Approach (AMA).

We go on to discuss measurement and management of market risk and liquidity risk There is more emphasis in this chapter on liquidity risk – especially funding liquidity risk with reference to Basel core principles for liquidity management. The liquidity-VaR is presented in an Appendix.

This module concludes with the elements of risk- based pricing.


• explain typical risks in retail banking as

defined by Basel II

• explain the meaning of Value at Risk (VaR),

how it is affected by the value of the

portfolio, the period, the confidence level,

and the portfolio’s volatility, and describe

VaR’s weaknesses as a metric

• calculate and interpret Credit VaR and

Market VaR from information supplied.

• calculate expected credit loss using

the default mode (DM) paradigm from

information supplied, and identify the

limitations of the DM paradigm.

• explain how both expected and

unexpected losses contribute to Credit

VaR, and how they might interrelate

• estimate, from information supplied,

operational risk charges using the

Basic Indicator Approach (BIA), the

Standardised Approach (SA) and the

Internal Measurement Approach (IMA),

and compare the different approaches

• list and explain operational risk monitoring

tools, including key risk indicators (KRIs).

• list and explain liquidity risk monitoring

tools, including contractual maturity

mismatch and concentration of funding.

• explain the principle of risk-based pricing

in retail banking, and calculate from

information supplied the margin required

over the cost of funding.

“Congratulations on producing such an educational and inspiring programme put together

by experienced professionals.”

Credit Division, Millennium bcp, Portugal

RISK MANAGEMENTMODULE 209

CRB Prospectus / 21

• explain the meaning and significance

of the main entries in generic income

statements, balance sheets, loan books

and maturity analyses for retail banks

• conduct risk analyses of generic balance

sheets for retail banks by calculating the

banks’ cumulative maturity positions.

• explain the meaning and significance

of the six CAMELS dimensions (Capital

adequacy, Asset quality, Management

soundness, Earnings and profitability,

Liquidity and Sensitivity to market risk)

• compute, from information supplied,

and interpret bank accounting ratios

that demonstrate the CAMELS model,

including Tier 1 capital adequacy ratio,

leverage ratio, Risk-weighted Asset (RWA),

Asset quality via the Loan Book, Loan loss

provisions, Return on Assets (ROA), Return

on Equity (ROE), Cost to Income Ratio

(CIR), Liquidity ratios, and Cost of funds.

• identify extraneous drivers of ROE.


The scope of this module covers five areas: key principles of bank financial statements; structure of bank financial statements; analysis of bank financial statements using the CAMELS framework (Capital, Asset Quality, Management, Earnings and Profitability, Liquidity and Market Sensitivities); drivers of bank profitability; and the importance and relevance of bank capital.

While some financial analysis was conducted at a higher level in Retail Banking Overview, a more detailed financial statement analysis is conducted in this module with the familiar CAMELS approach as a guideline. This leads to a discussion of maturity (gap) analysis, capital adequacy, liquidity ratios, profitability ratios and soundness of balance sheets with reference to nonperforming loans and impairment charges.

The module concludes with a case study requiring a complete financial statement analysis.

“Consumer banking considers the customer relationship as its only real asset. All other traditional assets or balance sheet items are

manifestations of this relationship.”

Dr Stefan Kaminsky

FINANCIAL MANAGEMENTMODULE 210

CRB Prospectus / 22

This module sets out to define the requirements for retail banking leaders of the future and the differences between management and leadership.

We consider that an effective leader in retail banking must, without wavering, create an ethical culture that pervades the organisation at all levels. Compliance is not enough. An effective leader in retail banking creates a moral compass for all employees and inspires them to serve customers’ needs and, thereby, to create long-term profitability for the bank.

We also consider leadership in retail banking with special emphasis on the following topics:

• Leadership and change management• Communicating and understanding resistance to change• Principled leadership in retail banking• Creating an ethical bank culture• Leading through Fintech revolution

Leading a bank successfully through digital transition requires special attention and skill set from senior decision makers. The process and skills to influence the achievement of a common vision are changing, because the common vision itself is changing.

Finally, we study 18 banking CEOs from around the world and see how they intend to lead their large tankers through the storm of the century (the financial technology revolution).


• define leadership and explain its

relationship to change management

• identify the qualities that define principled

leadership in retail banking – authentic,

ethical and transformational

• demonstrate the leadership behaviours

required to create an ethical, values-

based bank culture that enables excellent

customer service.

• develop communications strategies

that will gain engagement and

commitment, including the identification

of stakeholders, the choice and use of

communication channels, the choice of

message content, and the provision of

feedback.

• lead a team through a change programme

by application of Kotter’s 8-step model

• recognise employees’ emotional reactions

to change, and develop strategies to

address these reactions

• analyse how to maintain principled

leadership in retail banking during periods

of dynamic change in financial technology

and of digital transition.

“This course provides me with access to best practices, with an emphasis on retail banking leadership and topics such as efficiency and business strategies that are critical to the success of a retail banker. All are highly relevant to me in my current position as consumer banking head in the bank. ”

Head of Retail Banking, Maybank, Malaysia

LEADERSHIP IN RETAIL BANKINGMODULE 301

CRB Prospectus / 23

• explain how business strategy for a

retail bank combines forward market

positioning, risk mitigation, and talent

management

• analyse macroeconomic factors that are

likely to affect the retail bank over the

medium term, using the PESTEL model

(Political, Economic, Social, Technological,

Environmental and Legal)

• describe how digitisation is affecting

both customer expectations and the

competitive environment for retail banking

services

• identify Threats and Opportunities (TO)

for the retail bank by evaluating the tides

of change in retail banking and by the

analysis of strategic market research

• create an Ansoff matrix classifying

possible business strategies as market

penetration, product development,

market development, or diversification

• position the possible business strategies

along a time horizon to create a proposal

for forward market positioning

• analyse the weaknesses and strengths

(WS) of the retail bank relating to each

of the possible business strategies, to

identify core competency gaps

• recommend adoption of specific business

strategies on the basis of risk and return,

competency alignment, and cultural

distance

• identify and interpret key performance

indicators (KPIs) for business strategies

in the different quadrants of the Ansoff

matrix, to monitor progress and to

motivate bank employees.


Changes in the landscape and environment of retail banking are frequent and challenging. Within this environment, and with so much change and transformation surrounding banks, having a clear and well-defined business strategy is paramount.

The threat to retail banks’ relevance is driven primarily by three factors. Firstly, digital native companies are changing consumer behaviours and expectations by showing customers what a great customer experience looks like. Secondly, many banks are still not equipped to respond to these demands and meet these expectations.

Finally, digital innovators like Amazon and others have raised the bar for customer expectations regarding service, speed and convenience, and have created the expectation that banks will interact seamlessly with customers through new digital channels while continuing to offer human intervention when required.

This module sets out to address these challenges by covering the following areas:

• Developing a business strategy• Creating a business strategy in retail banking• Digital banking strategy and challenges• Executing strategy efficiently “A separated, independent retail banking sector

should be led by professionally qualified retail bankers, bound by an ethical code similar to those already in place for accountants and lawyers.”

Evidence Submission from the Retail Banking Academy to the Parliamentary Commission on Banking Standards.

BUSINESS STRATEGIES FOR RETAIL BANKINGMODULE 302

CRB Prospectus / 24

This module considers the main issues of brand management, with special consideration of the Keller (1993) and Berry (2000) models of brand equity. Both models are consumer-based brand equity (CBBE) models, but the Berry model places additional emphasis on the role of customer experience in creating brand meaning – while internal communications (the presented brand) and external communications (e.g. WOM and publicity) have a direct influence on brand identity.

The lesson for retail bank managers is that the five dimensions of customer service quality – reliability, empathy, responsiveness, assurance and tangibles – are all important for the enhancement of brand equity through their direct effect on brand meaning for the consumer. On the other hand, marketing strategies have a direct bearing on brand identity. These two key factors – brand identity and brand meaning – are the foundations of the brand equity ladder.

We also present other important lessons for the retail bank executive that include the importance of employer branding. This module culminates with issues related to co-branding and the importance of brand congruence for success.

This module concludes with how to create a credible digital innovation and transformation narrative in retail banking for Millennials while building differentiated branding for a traditional retail bank versus Big Tech providing financial services and challenger banks.


“What you have to do is understand the consumer, understand that there is a life cycle in terms of consumer needs. These needs are universal. There is nothing that I learned that suggested that they were local to any one country. It is the same basic

business. It is a solid business.”


• differentiate brand equity from brand

value where the former is determined by

customers’ experience.

• develop strategies to determine brand

equity, on the basis of Keller’s customer-

based approach.

• analyse the impact of customer

experience on bank brand management,

draw lessons from the Berry Model for

retail bankers, and assess the key role

of the five antecedents of customer

satisfaction in creating brand meaning.

• analyse and evaluate the impact on the

bank’s brand equity of internal actions

including hiring decisions, employee

performance management, and actions

for operational excellence.

• evaluate the two success factors

(congruence and expectancy) for co-

branding.

• develop concepts of digital brand identity

and define bridges between old and new

brand elements.

• recognise and manage social media

related public relations issues.

• create a credible digital innovation and

transformation narrative in retail banking

for the Millennial segment.

BRAND MANAGEMENTMODULE 303

CRB Prospectus / 25

• compare two underlying theories of

corporate governance in retail banking –

agency theory and stewardship theory.

• explain why agency theory can lead to

opportunistic behaviour by management

at the expense of other stakeholders,

whereas stewardship theory values

collaboration.

• explain the accountabilities of

management within a retail banking

environment.

• describe the main entities of corporate

governance in retail banking – the

board of directors, senior management,

supervisors and risk managers.

• identify the main issues in relation to the

effectiveness of the board of directors –

skill, expertise and independence, term

limits, directors’ busyness and size of the

board.

• evaluate executive compensation plans

in terms of alignment with prudent

risk taking, being symmetric with risk

outcomes, sensitive to time horizons, and

subject to clawback/malus.

• evaluate the role of bank operational

structures in affecting sound corporate

governance structures in relation to risk

management and ethical practices.


This module deals with corporate governance and ethics in retail banking. We present the underlying theories of corporate governance – the agency theory and the stewardship theory which includes the stakeholder theory. Then we consider the role of important corporate governance instruments in monitoring the actions of senior management, especially in light of agency theory. The module presents four factors for an effective board of directors in relation to oversight of senior management. The key role of senior management in sound corporate governance in banking is also considered as:

• ensuring that the bank’s activities are consistent with the business strategy, risk profile and policies approved by the board

• aligning with the board of directors to set the tone at the top by being exemplary

• creating an ethical corporate culture• ensuring that management’s actions align with the board’s

directives.

We also consider the role of risk management in corporate governance in banking. Importantly, the role of the Chief Risk Officer is emphasised in terms of authority and independence. In addition, the role of supervisors and the effects of regulation are discussed. Finally, we present a link between the operational structure of a retail bank and the risks that may emanate from it. The module concludes with a discussion of the potential link between silos and the ethical behaviour of bank employees.

“When this opportunity (to study) came up I jumped at it, knowing that it was a relevant qualification directly related to my day-to-day

work and passion.”

Delbert Chimbandi, Segment Strategy & Proposition Manager, Standard Chartered Bank

GOVERNANCEMODULE 304

CRB Prospectus / 26

This module considers operational excellence in retail banking as an enabler of management’s strategic objective of value creation through customer-centricity. Sources of complexity in banking operations arise from process, product and organisational structure, and they represent potential barriers to achieving operational efficiency. Various lessons and pieces of advice are presented to management to identify and mitigate these potential impediments.

The design and deployment of a multi-channel strategy is also considered. The objective of this strategy is to provide a seamless and consistent customer journey across an integrated network of bank channels. It is demonstrated that data and IT silos are key impediments for the successful implementation of a multi-channel strategy, and practical recommendations are made for their mitigation. In addition, we discuss the operational barriers presented by knowledge silos and suggest how management can bridge rather than break down these silos to mitigate knowledge silos.

Finally, we consider common biases in customer behaviour that can lead to dilemmas that have an impact on management actions to achieve operational excellence. Importantly, we show how status quo bias can affect actions of management to implement an effective customer migration strategy.

We consider the potential for Blockchain to revolutionise back office processes in retail banking along with implications for promoting cost efficiencies. Finally, we consider international best practice in the application of cloud banking while also considering the risks associated with cybersecurity and the associated regulatory challenges.

• analyse how process, product and

organisational complexities present

hurdles for effective business strategies.

• evaluate multi-channel strategies to

provide a seamless and consistent

customer journey on the bank’s network of

channels.

• identify where data and IT silos are key

impediments to an effective multi-channel

strategy.

• evaluate strategies to bridge rather

than break knowledge silos in a retail

bank by applying the Gulati 4Cs model

(coordination, cooperation, connection

and capability).

• analyse how behavioural bias in consumer

behaviour can impede management’s

actions for a successful bank-initiated

channel migration strategy.

• relate the behavioural bias arising from

sunk cost theory to the need for a

transparent culture where group decision

making is encouraged.

• identify key areas for the application of

Blockchain in retail banking and describe

risks related to Blockchain and to

Distributed Ledger Technology (DLT).

• identify the role of emerging technologies

such as Artificial Intelligence (AI) and

cloud banking in operational excellence,

and analyse associated risks linked to

cybersecurity and to regulation.


“This course gave me much optimism for the future of the business we are in and the value of

retail bankers to their organisations.”

Managing Director, Bank OCBC NISP, Indonesia

OPERATIONAL EXCELLENCEMODULE 305

CRB Prospectus / 27

• apply the Basel Committee approach of

duration gap analysis to estimate how the

market value of shareholders’ equity will

change because of changes in interest rates,

and suggest how to alter the durations of

assets and/or liabilities to control this risk

• explain why the applicability of the Basel

Committee approach of duration gap

analysis is limited by its assumptions and

by the inclusion of embedded options in

securities

• identify by inspection price-yield curves with

positive, zero and negative complexities,

and relate the complexity values to the

characteristics of different fixed income

securities

• derive more accurate estimates of interest

rate risk for fixed income securities by

applying the relevant formula combining

modified duration and convexity, and

explain why this approach is not necessary

for small interest rate changes

• derive strategies to immunize shareholders

from interest rate risk by reducing the

duration gap to zero, by

asset or liability restructuring (ensuring a

positive convexity gap)

making use of interest rate swaps

• explain how the Basel Committee require

retail banks to manage liquidity risk by

maintaining minimum Liquidity Coverage

Ratios (LCRs) and Net Stable Funding Ratios

(NSFRs), and describe how Liquidity Transfer

Pricing (LTP) is used to help manage the

costs of this funding

• distinguish between between Foundation

Internal Ratings Banks (FIRB) and Advanced

Internal Ratings Based Banks (AIBB), explain

the four factors which both use to estimate

credit risk, and derive from information

supplied estimates of credit risk weights and

the corresponding capital charges

• explain counterparty credit risk, and

describe how this risk can be managed for

both over-the -counter (OTC) and central-

clearing-party (CCP) transactions

• describe the breakdown of operational risk,

explain how it differs from but is linked to

credit risk and market risk, and compare the

two Advanced Measurement Approaches

(AMA)) that can be used to address this risk

– the Internal Measurement Approach (IMA)

and the Loss Distribution Approach (LDA)

• explain why the retail banking business

model brings with it specific risks that are

not shared with other businesses

• describe how all risks are managed by

reference to a risk appetite framework

(RAF), and how accountabilities for the

risks are located within the retail bank’s

organisational structure, including the

board, audit committee and chief risk officer

(CRO) as well as operational staff.


This module presents advanced methods for managing interest rate risk and liquidity risk, the two main dimensions of Asset Liability Management (ALM). In particular, we show how to manage a duration gap with interest rate swaps as well as the impact of negative convexity on residential MBS and on callable bonds in general. The treatment of liquidity risk management complements the extensive coverage in the risk management module of Retail Banking II. We consider capital allocation methods for (internal ratings-based) IRB banks with emphasis on credit risk for retail exposures. The Loss Distribution Approach (LDA) is emphasised for operational risk. Capital allocation for counterparty risk with Credit Valuation Adjustment (CVA) is considered for both Over-The-Counter (OTC) and Central Counter Party (CCP) transactions.

We also deal with the central issues in risk governance that complement the Governance and Ethics module. Appendix I is a summary of relevant formulae that are applied in this module and Appendix II comprises the BCBS stress testing methodology for bank balance sheets.

RISK AND CAPITAL MANAGEMENTMODULE 306

CRB Prospectus / 28

develop a strategy that gains commitment and buy-in from all employees.

develop solutions to meet the bank’s customer needs.

achieve operational excellence.

attract, grow and retain the right people for a competitive and sustainable advantage.

deliver financial solutions in a customer friendly and focussed way.

implement measures that fulfil the bank’s prudential responsibility and maintain sustainability.

maintain an ethical values-based culture to enable excellent customer service.

enhance brand values to attract customers with effective marketing.

implement a governance structure that serves all stakeholder interests.

determine financial needs and preferences of the bank’s customers.

optimise the bank’s service culture.

conduct business within regulatory constraints to manage risk.

implement MI systems with KPIs to maximise performance.

301 - 302

101 - 107

105 - 110

103 - 110

105 - 106

107

108

101

101 - 109

104 - 106 - 107108 - 110

102 - 109

205

204 - 206

201

202 - 203 - 205

201

204

202 - 206 - 207

203 - 208 - 209210

209

206 - 210

205 - 207

203 - 208 - 209210

301

301 - 303

305

303

303

304 - 305

304 - 306

304 - 306

302 - 306

303 - 305

302 - 304 - 306

RBA Competency Framework in Retail Banking to: RB I RB II RB III

CRB Prospectus / 29

EXAM STRUCTURERBA certification and the right to use the Certified Retail Banker designation (CRB) after your name can be achieved by passing exams at each level of the programme - and joining RBA Membership.

Retail Banking I and II

• The examination for Retail Banking I comprises two (2) parts, each lasting a period of two (2) hours. There is an eight (8) minute break between each part. Each part of the examination is conducted independently.

• The first part (hereafter, Part A) comprises eighty (80) multiple-choice questions. Each question has only one (1) correct answer. Each question is worth one (1) mark for a total of eighty (80) marks.

• Questions in Part A examine for mastery of key principles and concepts presented in each module.

• The second part (hereafter, Part B) comprises six (6) scenarios or mini-cases. Each of these six (6) scenarios or mini-cases requires answers to eight (8) multiple-choice questions. Each scenario or mini-case is worth eight (8) marks for a total of forty-eight (48) marks.

• Questions in Part B examine for mastery of key principles and concepts presented in each module. Each question describes a retail banking scenario or a real banking case.

Retail Banking III

• The examination for Retail Banking III comprises two (2) parts, each lasting two (2) hours. There is an eight (8) minute break between each part. Each part of the examination is conducted independently.

• The first part (hereafter, Part A) comprises sixty (60) multiple-choice questions on the six (6) modules and lasts for a period of two (2) hours. Each question is worth one (1) mark for a total of sixty (60) marks.

• Questions in Part A examine the mastery of key principles and concepts presented in each module.

• The second part (hereafter, Part B) comprises six (6) compulsory scenarios or mini-cases. Each scenario or mini-case has a set of eight (8) multiple-choice questions that is worth one (1) mark for a total of forty-eight (48) marks.

• Questions in Part B examine for mastery of advanced principles and concepts presented in each module. Participants will be examined on their respective abilities to demonstrate how the various retail banking issues covered in the different modules of this course are connected.

Criteria for Passing each Examination• In calculating the final grade, equal weighting is given to each part of the examination.

• A candidate is deemed to have passed the examination if he/she obtains a minimum overall score of sixty-five (65) percent and a minimum score of fifty (50) percent in each part of the examination.

• For Retail Banking I, there is an additional requirement to pass the Ethics section of the exam with a minimum overall score of sixty-five (65) percent.

• Assessments will be made against a marking scheme that has been agreed by at least three parties.

• All assessments will be conducted by the Retail Banking Academy’s Awarding Body.

CRB Prospectus / 30

CRB Prospectus / 31

RBA Membership will send a powerful message to your customers, colleagues

and the regulators that you are committed to maintaining the highest standards of

professionalism in your work.

It will also provide you with an unmatched international network of fellow professionals

and an unparalleled research resource that you can access at any time.

CRB Prospectus / 31

“The platform allows me to be up-to-date with what’s happening in broader banking community and great way to reach out to like-minded professionals and learn from their experience.”

Ankur ShardaSolutions Delivery Manager, ING

Australia

Continuing Professional

Development opportunities

RBA Membership

Designation Pin

Careers Development

Advice

Unparalled Research

Resource (CPD Portal)

RBA Membership

Directory

International Network of

fellow professionals

RBA MEMBERSHIP BENEFITS INCLUDE:

RETAIL BANKINGACADEMY

Empowering Bankers. Serving People.

®

International House 1-6 Yarmouth Place, Mayfair, London W1J 7BU www.retailbanking-academy.org

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