Updated: September 28, 2004

/ EFCB
Standard Examination Model (SEM)
  1. GENERAL INTRODUCTION

The European Bank Training Network (EBTN) is an Association of leading European Bank Training Institutes. The Professional Standards Committee of EBTN with support of the Leonardo Programme of the European Union, developed in close co-operation with 18 members of 16 European countries, the European Foundaton Certificate in Banking (EFCB).

The European Foundation Certificate in Banking is based on a Standard Examination Model (SEM). The Standard Examination Model is the QUALITY MODEL of the European Foundation Certificate in Banking.

Bank employees who have passed a qualifying examination can obtain the EFCB.

The EFCB can only be delivered by an Accredited Institute. Accreditation takes place through the Accreditation Committee of EBTN. The main objective of the Accreditation Committee is to assure the quality of the examination.

The target group for the EFCB is:

  • Bank employees with at least secondary (vocational) education and who start their careers in a bank, and
  • Bank employees already working in the bank, but without any formal professional banking education.

Bank employees who have obtained the EFCB have a basic understanding of:

  • The monetary-economic environment in which European banks operate;
  • Customer-product/service relationship;
  • The fundamentals of marketing, management and ethics.

The bank employee gains his/her knowledge through study of a national banking education programme, of approximate duration of 250-300 notional study hours, provided by the Accredited Institute.

The examination is organised at the national level by the Accredited Institute whereby:

  • The method in which the examination is to be organised, is described in Part A of the SEM: The Exam Format; and
  • The knowledge to be tested is described in part B of the SEM: The Exam Profile.

The EFCB, based on the national study programme and the qualified national examination, is recognised by all Accredited Institutes.

  1. THE STANDARD EXAMINATION FORMAT
  1. Type of questions

The EFCB examination is based on an examination consisting of MC-questions.

  1. The number of questions

The number of questions is set at 100.

III. The number of alternatives per MC-question

The MC-question has four alternatives of which only one is correct.

So questions will look like the example below:

Question 1.
The monetary policy of the ECB is based on......
......
Which of the following statements is correct?
A......
B......
C...... ◄ the only correct answer
D......

IV.The duration of the examination

Based on 100 MC-questions the duration of the examination is set at a maximum of 180 minutes.

V.The examination procedures

In principle the organisation and physical environment of the examination is left to best national practices of the Accredited Institute. However minimum standards such as the following will have to be assured:

  1. Validity: exam should conform with the exam profile.
  2. Reliability: exam should give the same results, if repeated.
  3. Acceptability: exam is fair to examinees.
  4. Transparency: examinee knows what is expected and what the certificate stands for.

Every Accredited Institute will be asked to describe in a concise way its EFCB examination procedures.

VI.The schedule of the examination

The schedule of the examination is left to best national practices, however every Accredited Institute will be asked to provide it to the Accreditation Committee.

VII.The scoring definition

The scoring definition relates to the decision of whether a student has passed his/her exam. The pass rate is set at 60%. Students should answer at least 60 of the 100 questions correctly in order to pass.

  1. The reliability and validity of the MC-questions, and the overall exam

For the validity of the individual exam questions and the exam as a whole at least the following - or comparable - standards should be applied:

On the question level:

The average score on an exam question should lie between 40% and 80%. This means that between 40% and 80 % of the participants should score on this question.

  • The question should discriminate: this means that the results of the top 30% of the candidates should be better than the results of the lowest 30% of the candidates.

Example:

There are 100 participants in total in the examination. The top 30 participants with the best score are compared with the 30 participants with the lowest score. The scores are as follows: from the top 30, 25 have answered the question correctly, from the low 30, 10 have scored the question correctly.

The formula is then: [25 : 30] -/- [10 : 30] = 0,83 -/- 0.33 = 0, 50. This is the discrimination factor. A question should have a positive discrimination factor.

On the exam level:

The average score on the exam as a whole should be around 65%. This means that around 65% of the participants should pass the exam.

Validity and reliability are measured after each examination, and can be reasons to:

  • Adapt the standard scoring definition or pass rate of the individual exam; and
  • Correct the exam question for future use.

Every Accredited Institute will be asked to describe its exam analysis system.

  1. SEM PROFILE

The SEM profile is based on a division of the exam objectives in three clusters:

  • Cluster A: The monetary – economic environment;
  • Cluster B: Customer – product relations;
  • Cluster C: Behavioural aspects: management, marketing and ethics.

Clusters A and B are divided into bullet points and consequently into exam objectives related to those bullet points. Cluster C is first divided into 3 areas and then consequently into exam objectives.

The relative weight of the clusters, and of the exam objectives per exam is:

  • Cluster A: 20%
  • Cluster B: 60%
  • Cluster C: 20 %

The examination based on the SEM profile should test knowledge and competencies:

  • On the cluster level, relative to the importance of the cluster level; and
  • On the area level (for Cluster C) based on the equality of the three areas;

The 100 questions are divided in the following way over the clusters, bullet points and areas of cluster C.

SEM PROFILE
Cluster A
A.1 / 6%
A.2 / 14%
Total of 20% of exam questions
Cluster B
B.1 / 9%
B.2 / 21%
B.3 / 21%
B.4 / 3%
B.5 / 6%
Total of 60% of exam questions
Cluster C
C I / 6%
C II / 7%
C III / 7%
Total of 20% of exam questions
Total / 100%

The questions are based on the exam objectives. For the exam objectives to be selected and tested we refer to the Annex: Exam Objectives.

ANNEX: EXAM OBJECTIVES

INTRODUCTION TO THE EXAM OBJECTIVES

The exam objectives are divided into three clusters and are related to the target group mentioned under Point 1 of the Standard Examination Model. When interpreting the exam objectives it should be understood that the knowledge to be gained by the employee will be a broad and basic understanding of the elements mentioned in the Clusters, of which Cluster B should be of primary importance.

The understanding of the elements of Clusters A and C should be oriented and related to the practical level on which the target group is functioning in the bank.

When introducing best national practices, the institute should make a fair appraisal of best national practices in relation to both the target group and the exam objectives of the Standard Examination Model.

CLUSTER ATHE ECONOMIC AND MONETARY ENVIRONMENT

BULLET POINT A.1: ECONOMIC AND FINANCIAL STRUCTURE OF THE EUROPEAN AREA

A.1.1KEY CHARACTERISTICS OF THE EUROPEAN ECONOMY

The student is able to summarise the economic process within the European area.

A.1.1.1He/she can describe the role of the main parties in the macro economic circulation process like households, companies, financial institutions, the state and foreign countries.

A.1.1.2He/she can point out the main features of the European economy such as the average rates of growth, unemployment, inflation and interest.

A.1.2ROLE AND STRUCTURE OF THE FINANCIAL SYSTEM

The student is able to interpret the financial system.

A.1.2.1He/she can describe the economic function of the financial system.

A.1.2.2He/she can explain the differences between money and capital markets.

A.1.2.3He/she can describe the role of banks and other financial institutions.

A.1.3THE BANKING ENVIRONMENT IN THE EUROPEAN AREA

The student is able to describe the context in which European banks operate.

A.1.3.1He/she can explain the national banking and financial system, its structure and particularities as well as its relationship with the European banking market.

A.1.3.2He/she can identify the impact of EU directives concerning banking regulation.

A.1.3.3He/she can explain the role and functions of the supervisory authority or authorities respectively within the national banking regulatory system.

A.1.3.4He/she can explain in general terms what ‘Basel II’ means and predict its foreseen impact on the European banking sector.

BULLET POINT A.2: MONETARY POLICY IN THE EUROPEAN AREA

A.2.1THE EURO SYSTEM

The student is able to describe the monetary system related to the euro.

A.2.1.1He/she can define the three general functions of money and depict at least one of them.

A.2.1.2He/she can name in general the functions of central banks.

A.2.1.3He/she can explain the reasons why the central bank has become independent from the government.

A.2.1.4He/she can classify the objectives of the EMU.

A.2.1.5He/she can point out the relationship between the ECB, the ESCB and the Eurosystem.

A.2.1.6He/she can name the two decision making bodies of the ECB and describe the difference between them.

A.2.1.7He/she can recite the ECB’s definition of price stability.

A.2.1.8He/she can describe the difference between the first and the second pillar of the ECB’s monetary policy strategy.

A.2.1.9He/she can name the four operational tools of the ECB for monetary policy implementation.

A.2.1.10He/she can name the three kinds of interest rates that compose the so-called ‘corridor’ on the money market in the Eurozone.

A.2.1.11He/she can describe the current state of monetary policy in the Euro Area.

A.2.2NATIONAL MONETARY SYSTEM

The student is able to relate the position and tasks of the National Central Bank to those of the ECB.

A.2.2.1He/she can name the decision-making bodies of the national central bank in his/her country and compare it with the Eurosystem.

A.2.2.2He/she can name and describe the monetary policy of his/her national central bank (if his/her country is not a member of the Eurosystem).

A.2.2.3He/she can name the instruments of the national central bank for the monetary policy implementation.

CLUSTER BPRODUCT – CUSTOMER RELATIONSHIP

BULLET POINT B.1: PRODUCTS, CUSTOMERS, DISTRIBUTION & COMPETITION

B.1.1PRODUCTS

The student is able to interpret a bank’s financial statements.

B.1.1.1He / she can define the items on both the balance sheet and profit & loss account which appear in the public annual report of a bank.

B.1.1.2He / she can distinguish the so-called asset and liability products in terms of liquidity and solvency.

B.1.1.3He / she can define:

  • Interest margin products
  • Fee operations products
  • Off-balance products

B.1.1.4He / she can relate any given bank product into the categories mentioned above both to the balance sheet and to the profit and loss account.

B.1.1.5He / she can describe the correlation between banks and financial markets.

B.1.1.6He / she is able to define the intermediary role that a bank plays in relation to products of the categories mentioned under B.1.1.3.

B.1.1.7He / she can contrast intermediation with modern technological development.

B.1.2CUSTOMERS

The student is able to segment the customer market and relate products to customer profiles.

B.1.2.1He / she is able to describe what customer segmentation is and the criteria used.

B.1.2.2He / she can associate customer segmentation with the overall strategy of a bank.

B.1.2.3He / she can define terms as:

  • Customer behaviour
  • Customer decision process
  • Satisfaction measurement

B.1.2.4He / she can describe the concept of Customer Relation Management (CRM) and identify why a bank uses this concept.

B.1.3DISTRIBUTION & COMPETITION

The student is able to describe how a bank sells its products and what the competition is from non-bank institutions.

B.1.3.1He / she can define the distribution channels of a bank.

B.1.3.2He / she can list the advantages and disadvantages of those channels.

B.1.3.3He / she can describe how the distribution channel is influenced by

  • Customer needs
  • Competition
  • Technological development

B.1.3.4He / she can describe the development of the ‘traditional’ branch network and the on-going need for restructuring.

B.1.3.5He / she can define terms like:

  • Financial supermarket
  • Franchising
  • Cross-selling
  • Cherry picking

B.1.3.6He / she can describe the main trends in banking both worldwide and especially in Europe.

B.1.3.7He / she explain the appearance of non-bank competitors and their competitive advantages.

BULLET POINT B.2: THE PRIVATE CUSTOMER

B.2.1PRIVATE CUSTOMER SEGMENTATION

The student should be able to understand who the private customers are and how they can be distinguished.

B.2.1.1He/she can define the private customer.

B.2.1.2He/she can name the most common ways of segmentation of the private customer (by age, wealth, and residence).

B.2.1.3He/she can describe the life cycle of the private customer.

B.2.1.4He/she can depict why banks segment their private customers (different needs and potentials).

B.2.1.5He/she can list the legal aspects involved as a consequence of the differing legal status of the private customers.

B.2.1.6He/ she can describe the difference between the private customer and the self-employed customer.

B.2.2PRIVATE CUSTOMER PRODUCTS AND SERVICES

The student is able to define what bank products / services can be offered to the private customer and describe the processes involved.

B.2.2.1He/she can classify the private customer products and services in interest margin products and fee services.

B.2.2.2He/she can relate the cost structure and risks to the classification of the products and services for the private customer.

B.2.2.3He/she can divide the interest margin products for the private customer in liability and asset products.

B.2.2.4He/she can list the motives why the private customer is interested in saving products.

B.2.2.5He/she can make a distinction between the notions of saving and investing.

B.2.2.6He/she can describe the administrative process involved in saving products for the private customer.

B.2.2.7He/she can list the different loan products for the private customer.

B.2.2.8He/she can describe the notion of collateral and define the several formats of collateral.

B.2.2.9He/she can describe the administrative process of non-mortgage loans to the private customer and the legal aspects involved.

B.2.2.10He/she can describe the mortgage loan process in the following terms:

  • The legal aspects of ownership transfer
  • The legal aspects of mortgaging
  • Relating income to the price of the house and the mortgage requested
  • The listing of the necessary documents and control of those documents
  • The follow-up process and control

B.2.2.11He/she can describe and differentiate the payment services open to the private customer.

B.2.2.12He/she can define what a current account is and the importance of this account.

B.2.2.13He/she can distinguish the several card services open to the private customer.

B.2.2.14He/she can explain why the electronisation of private customer products and services is both in the interest of the bank and the customer.

B.2.3SEGMENTATION AND PRIVATE CUSTOMER PRODUCTS AND SERVICES

The student is able to correlate private customer needs with products and services.

B.2.3.1 He/she can describe the relationship between the life cycle and the need for private customer products and services.

B.2.3.2He/she can explain the notion of financial planning.

B.2.3.3He/she can describe in general terms the activities of the Financial Planner.

BULLET POINT B.3:THE COMPANY CUSTOMER

B.3.1COMPANY CUSTOMER SEGMENTATION

The student is able to divide the company customer according to criteria that are of influence to the bank / customer relationship.

B.3.1.1He/she can describe why the size of the company is of influence on the financial instruments offered.

B.3.1.2He/she can explain in what way the main activities of a company create different financial needs.

B.3.1.3He /she can define the differences between profession driven commercial activities and non-profession driven commercial activities.

B.3.1.4He /she can list the legal formats in which commercial activities can take place.

B.3.1.5He / she can define for:

  • The commercial (private) entrepreneur
  • The limited company
  • The association
  • The foundation

The legal aspects related to:

  • Ownership
  • Responsibility

B.3.1.6He/she can estimate in general what impact the choice of a legal format (for a company) has on taxation.

B.3.2COMPANY CUSTOMER PRODUCTS AND SERVICES

The student is able to understand that company finance is a total concept and that products and services are embedded in the financial structure of the company.

B.3.2.1He/she can explain the difference between standard and tailor made products and services.

B.3.2.2He/she can describe why and in what way intermediation by banks can differ according to the size of the company served.

B.3.2.3He/she can classify the company customer products and services in interest margin products and fee services.

B.3.2.4He/she can relate the cost structure and risks to the classification of the products and services for the company customer.

B.3.2.5He/she can divide the interest margin products for the company customer in liability and asset products.

B.3.2.6He/she can list the several ways a company can deal with a positive cash flow.

B.3.2.7He/she can explain the difference between the private and company customer in relation to the concept of saving and investment.

B.3.2.8He/she can describe the rule of finance.

B.3.2.9He/she can define the loan products for company customers classified by term.

B.3.2.10He/she can contrast the notions of financial structuring and object related loans.

B.3.2.11He/she can define products such as:

  • Factoring
  • Leasing

B.3.2.12He/she can describe the fee services the bank can offer to the company customer.

B.3.2.13He / she can describe the national and international (documentary) payment services available to the company customer.

B.3.2.14He/she can describe the role of the bank as intermediator for the company with respect to shares and bonds.