As a financial institution, an investment bank plays the role of assisting corporations, governments and individuals with securities (IPO / FPO) or raising capital, ancillary services, mergers, acquisitions, derivatives trading, foreign exchange, equity securities and fixed income instruments. An investment bank works in multiple functionalities.
As such, a career in investment banking is lucrative and it begins by successfully cracking the investment banking interview.
This guide is designed to help candidates with informative knowledge for clearing the investment banking interview. It assumes that the candidate possesses the necessary financial background required for the position.
However, even if the candidate does not have finance background, it is still possible to land a job in investment banking. I recommend you this article that beautifully outlines the steps and hurdles along the way.
The Pre-Interview Stage
Preparation is the key to clear any investment banking interview. Once the elation of landing the interview subsides, it is time for some serious preparation.
1. Research the Financial Institution
A lot of candidates fail to clear the investment banking interview because they avoid researching the financial institution.
It is essential to have working knowledge about the financial institution, its activities, and what they are looking forward to in a potential candidate.
2. Research the Opening
Once the first step is accomplished, move on towards researching the role and responsibilities of the applied position.
Again, a detailed list of role and responsibilities is made available by the financial institution and it is the job of the candidate to dig deeper into the roles and prepare for the interview day. This is necessary to achieve higher success rate.
It is worthwhile to remember that the interviewer has other candidates lined up for the same position and there are time constraints too.
It is not rocket science to realize that the investment banking interview questions are going to crop up from the detailed roles and responsibilities the selected candidate needs to fulfill.
A candidate who is clear about the job’s roles and responsibilities in detail enjoys a higher chance of acing the interview.
To improve chances of selection, practice mock interviews.
3. Invest in Personal Grooming
While first impression is definitely not the last impression these days, it still matters.
Inappropriate clothing reeks of unprofessionalism. The interviewer or the panel looks into each aspect before drawing the final list of recruits and presentation features high on their list of attributes. The candidate needs to be dressed for the job.
Both male and female candidates should opt for power dressing. Power dressing imbues a sense of authority, competence and serious outlook. Never wear casual clothes and never be sloppy. Be confident and take ample rest before the D-day.
The Interview Stage
Potential candidates have lost jobs not because they lacked knowledge but due to subtle mistakes they make during interviews. It could be wrong body language, faulty manner of speaking, over confidence or lack of it and many other factors.
In the 1970’s the Journal of Applied Psychology published a seminal paper on Non-Verbal Cues in the Employment Interview where the findings revealed that social skills, the hiring potential of the candidate and motivation levels were seen by the interviewers to be closely correlated.
Let us look into the interview stage in some detail.
1. Professional Knowledge
This, as the term suggests, is all about questions related to investment banking. Candidates should expect both qualitative and quantitative questions.
Expect detailed question-answer sessions on topics like intrinsic valuation, relative valuation, cash flow analysis, case studies, financial instruments and other quantitative or technical questions. Find good resource books and papers online and do rigorous preparation.
As mentioned before, every dimension on the intended roles and responsibilities should be clear before going to the investment banking interview.
Furthermore, the candidate should focus on the resume. If the resume mentions experience in certain segment of investment banking, get ready for detailed questioning.
Interviewers are most likely to ask foremost from the experience shown on resume and only if the candidate clears the step, it goes on further.
While the technical questions are quantitative in nature, the qualitative questions focus on understanding whether the candidate is a ‘good fit’ for the financial institution or not. Adjudging the ‘good fit’ quotient is extremely important because investment banking entails a lot of group effort.
The candidate should expect questions on leadership, experience stated in resume, the intention behind working in investment banking, expected career growth down the line and analytical competency.
2. Body Language
The overall personality of the candidate plays an important role in hireability. Par excellence performance in displaying professional knowledge will not show any results if the body language or social skills is poor.
A better body language comes with practice; therefore, the candidate needs to constantly work on his or her body language and people skills.
There are many mistakes a candidate makes unknowingly. Here is an interesting find. The US-based body language guru, Patti Wood, says: “Most hiring decisions are made within the first ten seconds of an interview”. If this is true, an interviewee has ten seconds to make a profound impression.
While ten seconds are not enough to judge the professional competence of a person, it is perhaps enough to judge the person on social skills.
If the candidate assumes powerless poses like slouching, stuttering, displaying nervousness or appearing jittery, forget cracking the investment banking interview ever.
Here, the recommendation is to assume a ‘high power pose’ few minutes before the interview begins.
A study by Harvard Business School finds that those candidates who spent few minutes assuming high power pose fared better in the interview and it increased their chances of getting hired. Another significant study of 66 students at the Columbia University produced similar results.
What is a ‘high power pose’? In short, it is an attitude. It is a positive attitude, displayed through posture, which increases the level of confidence, gives an impression of power, makes the person calm and collected – all of these features are necessary while attending the interview.
The high power poses could be standing straight and standing with feet apart and hands on the hips. Avoid sitting with crossed hands, sitting with crossed feet, crossing hands at the hips or standing with crossed feet. These are low power positions that create a negative response in the mind of the interviewer.
Furthermore, it is essential to maintain eye contact and get the handshake right.
Avoiding eye contact is always discouraged. Patti Wood says, “It is about being present and connected to the interviewer. There is research showing that the amount of eye contact an interviewee made with the interviewer while questions were being asked is a key determinant of success”.
This does not mean that the candidate should stare at the interviewee. It means that the candidate should create an environment of connection and alertness while communication and answering questions.
Similarly, there are theories on handshakes. Some studies say a higher number of handshakes improve the chances of success while other studies recommend cultural awareness before shaking hands with the interviewee.
Note what Wood says: “Physical touch is a very important piece to the interview. A handshake has been shown to be equivalent to three hours of face to face verbal interaction in establishing rapport. If you shake your interviewer’s hand, it will immediately make you feel more comfortable and more likable. This is very beneficial in an interview situation”. Shake hands with the interviewer confidently before the interview commences and after it ends.
Lastly, do not keep a ‘plastic’ face devoid of emotions. Occasional smiles are important too.
3. Ending the Interview
End the interview on a positive note.
An investment banking interview is time consuming. As the interview is about to end, take the moment as an opportunity to share doubts and questions to the interviewer. It is common to have questions about the job profile and the financial institution. This is, again, an important practice as it shows that the candidate was present and engaged throughout the interview session. The candidate should not be a passive participant. Once all the doubts and questions are clear, end the interview on a positive note. Pick up the files, shake hands with the interviewer and exit the room confidently.
As is evident, the investment banking interview is not merely about displaying the ability to crunch number and boasting analytical skills.
There are multiple other factors which collaborate cumulatively to get the candidate the desired job profile. Always remember that it is not much about the technical knowledge but factors like body language and communication skills which has a slightly higher importance.
The Post-Interview Stage
Once outside the office or building, exhale a long breath and relax. Get ready for the next round of interviews in the same manner, as explained above. If there is no conclusive response from the interviewer, follow-up after three days with a phone call rather than an email.