Chartered Banker Institute Qualifications Professional Banking Foundations and the Role of the Banker Syllabus

Professional Banking Foundations and the Role of the Banker syllabus — full chapter and topic list

Expand any chapter to see its topics and sub-topics. This is the whole examinable outline for Professional Banking Foundations and the Role of the Banker in Chartered Banker Institute Qualifications, not a summary of it.

1. 1

   The Banking Industry and Its Operating Environment

   4 topics

   • Structure of the UK banking sector
     • Retail, commercial, corporate and investment banking distinctions
     • Building societies, challenger banks and neobanks
     • Mutuals, co-operatives and the role of the Post Office network
   • Functions of a bank in the economy
     • Maturity transformation and liquidity provision
     • Payment and settlement intermediation
     • Credit creation and the money multiplier
   • Key participants and infrastructure
     • Bank of England as central bank and lender of last resort
     • Clearing systems: Bacs, CHAPS, Faster Payments, Pay.UK
     • Correspondent banking and SWIFT
   • Drivers of change in modern banking
     • Digitalisation and branch network rationalisation
     • Open Banking and PSD2 data sharing
     • Competitive pressures from fintech and big tech
2. 2

   The Customer and the Banking Relationship

   5 topics

   • Customer segmentation and needs analysis
     • Personal, mass affluent and high-net-worth segments
     • SME and corporate client needs
   • Account opening and the customer journey
     • Customer Due Diligence at onboarding
     • Basic bank accounts and financial inclusion obligations
   • Relationship management principles
   • Treating Customers Fairly and customer outcomes
   • Handling vulnerable customers and reasonable adjustments
3. 3

   Core Banking Products and Services

   5 topics

   • Deposit and savings products
     • Current accounts, ISAs and notice accounts
     • Interest calculation and AER/EAR disclosure
   • Lending products overview
     • Overdrafts, personal loans and credit cards
     • Secured versus unsecured lending
   • Mortgages and home finance
   • Payment services and cards
   • Insurance and protection products distributed by banks
4. 4

   Professionalism and the Banker's Identity

   4 topics

   • The meaning of professionalism in banking
     • Knowledge, competence and continuing professional development
     • Public trust and the social licence to operate
   • The Chartered Banker designation and journey
   • Lessons from the financial crisis and conduct failures
   • The Chartered Banker Code of Professional Conduct

Professional Banking Foundations and the Role of the Banker flashcards for Chartered Banker Institute Qualifications

23 of 50 cards from the Professional Banking Foundations and the Role of the Banker deck — real questions with worked answers.

1. What are the three main types of bank in the structure of the UK banking sector?

   Retail (high-street) banks serving individuals and small businesses; commercial/corporate banks serving larger businesses; and investment banks dealing in capital markets, underwriting and advisory. Many UK groups are 'universal banks' combining these activities under one holding company.

2. In the UK banking sector, what is a building society and how does it differ from a bank?

   A building society is a mutual institution owned by its members (savers and borrowers) rather than by shareholders. Unlike a bank (a profit-seeking company owned by shareholders), it returns value to members and is traditionally focused on savings and mortgage lending.

3. What are 'challenger banks' and 'neobanks' in the modern UK sector?

   Challenger banks are newer, smaller banks competing with established incumbents. Neobanks (e.g. app-based digital banks) operate primarily or wholly online with no physical branches, using technology to offer lower-cost, customer-friendly services.

4. List the core functions a bank performs in the economy.

   Financial intermediation (channelling savings to borrowers), maturity transformation, providing a payments and money-transmission system, credit creation, risk management and pooling, and safekeeping of money and assets.

5. What is 'financial intermediation' and 'maturity transformation' as functions of a bank?

   Financial intermediation is the channelling of funds from those with a surplus (depositors) to those who need them (borrowers). Maturity transformation is borrowing short-term (e.g. instant-access deposits) and lending long-term (e.g. mortgages), accepting the resulting liquidity risk.

6. What is meant by 'credit creation' by banks?

   When a bank makes a loan it creates new deposits (money) rather than simply lending out existing deposits. Through this fractional-reserve process the banking system expands the money supply, which is why bank lending is central to economic activity.

7. Who is the central bank of the UK and what are its key roles?

   The Bank of England. Its roles include setting monetary policy and interest rates, acting as lender of last resort, issuing banknotes, overseeing financial stability, and operating core payment and settlement infrastructure.

8. In the UK, what are the roles of the PRA and the FCA?

   The Prudential Regulation Authority (PRA, part of the Bank of England) supervises the safety and soundness of banks, insurers and major investment firms. The Financial Conduct Authority (FCA) regulates conduct, market integrity and consumer protection across financial services.

9. What is the role of the Financial Services Compensation Scheme (FSCS) and its deposit protection limit?

   The FSCS is the UK's statutory deposit-guarantee and compensation scheme. It protects eligible deposits up to £85,000 per person, per authorised banking institution, if the firm fails.

10. What key pieces of payment and clearing infrastructure underpin UK banking?

    Examples include CHAPS (high-value same-day settlement), Bacs (bulk credits/Direct Debits), Faster Payments (near-instant low-value), the Image Clearing System for cheques, and card networks. The Bank of England's RTGS system settles between banks.

11. Name the principal drivers of change in modern banking.

    Technology and digitalisation (mobile, AI, data), changing customer expectations, regulation post-crisis, competition from fintechs and Big Tech, open banking, demographic and societal change, and sustainability/climate considerations.

12. What is 'open banking' and which regulation underpins it in Europe/UK?

    Open banking lets customers securely share their bank data with authorised third-party providers via APIs, enabling new account-information and payment-initiation services. It is underpinned by the second Payment Services Directive (PSD2).

13. What is customer segmentation in banking and why is it used?

    Segmentation is dividing the customer base into groups with similar characteristics or needs (e.g. by life stage, wealth, behaviour or business size) so the bank can tailor products, service levels and communications efficiently and meet needs more effectively.

14. What is a 'needs analysis' in the context of advising a banking customer?

    A structured process of gathering information about a customer's circumstances, goals and attitude to risk in order to identify their financial needs (current and future), so that suitable products and solutions can be recommended.

15. What are the main stages of the customer journey when opening a bank account?

    Application/onboarding, identity verification and Know Your Customer (KYC) checks, anti-money-laundering and sanctions screening, credit/eligibility assessment, account set-up and activation, then ongoing servicing and relationship management.

16. What 'Know Your Customer' (KYC) checks are required when opening an account?

    Verifying the customer's identity and address using reliable documents/electronic data, understanding the purpose of the account and source of funds, and screening against sanctions and politically exposed persons (PEP) lists, as part of AML compliance.

17. What are the core principles of effective relationship management in banking?

    Understanding the customer's needs, building trust through reliability and integrity, proactive and regular communication, delivering value and suitable solutions, anticipating future needs, and maintaining a long-term, mutually beneficial relationship.

18. What does 'Treating Customers Fairly' (TCF) mean as an FCA regulatory expectation?

    TCF is an FCA principle requiring firms to embed fair treatment of customers throughout their culture and processes, supported by six defined consumer outcomes covering culture, product design, information, advice, performance expectations and post-sale barriers.

19. State the six Treating Customers Fairly (TCF) consumer outcomes.

    1) Fair treatment is central to firm culture; 2) products/services are designed to meet identified needs; 3) clear, fair, not-misleading information; 4) suitable advice considering circumstances; 5) products perform as customers were led to expect; 6) no unreasonable post-sale barriers to switching, claiming or complaining.

20. What is the FCA Consumer Duty and how does it relate to TCF?

    The Consumer Duty raises and replaces much of TCF, requiring firms to act to deliver good outcomes for retail customers. It comprises a Consumer Principle plus cross-cutting rules and four outcomes: products and services, price and value, consumer understanding, and consumer support.

21. How does the FCA define a 'vulnerable customer'?

    A vulnerable customer is someone who, due to their personal circumstances, is especially susceptible to harm, particularly when a firm is not acting with appropriate levels of care. Vulnerability is dynamic and anyone can become vulnerable.

22. What are the FCA's four key drivers of customer vulnerability?

    Health (physical or mental conditions), Life events (e.g. bereavement, job loss, divorce), Resilience (low ability to withstand financial or emotional shocks), and Capability (low knowledge, confidence or skills in financial matters).

23. What are 'reasonable adjustments' when serving vulnerable customers?

    Practical changes a firm makes so vulnerable customers can access services on a fair basis, such as alternative communication formats (braille, large print), extra time, third-party authority, accessible channels, and flexible or sympathetic handling, in line with the Equality Act 2010.

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