Investment banking is a commonplace name in the modern financial-corporate world.
Unlike the investment banks of the 20th century, modern day investment banks are much more structured, technologically advanced and well networked.
They attract a large pool of skilled talent from countless universities that churn out investment bankers across the world.
In this article we are going to look at the careers in investment banking wherein an aspirant can build a successful career.
But before that, let us briefly touch on what investment banking really is.
Typically an investment bank is a financial intermediary that offers a variety of services, to both individual and institutional investors, ranging from financial advisory, underwriting, facilitating investment transactions to advisory on mergers and acquisitions.
One should not get confused with the term ‘banking’, as investment banking is far from traditional and commercial banking.
However, there are many commercial banks that also offer investment banking services.
A career in investment banking presents opportunity of global exposure to the aspirant as the work involved is irrespective of geographical boundaries.
The clients and projects approach from different corners of the world and are not restricted to the domestic boundaries of a country.
The nature of the work is also such that does not demand a lot of field work which means that a team of investment bankers can work out of a remote location without their physical presence in front of the client.
However it does not mean that investment bankers do not travel around the world for business.
Before going into a choice of profiles within investment banking, let us have a look at the career path of an investment banker:
These are usually people just out of college or employees with 1 or 2 years of work experience.
They are usually involved in data collection, creating presentations, and basic analysis of financial data.
This experience is important for any aspirant to be a successful investment banker as most of the financial concepts get developed during this course of his/her career.
After 3-4 years of experience, an analyst is promoted to the level of an associate, with additional responsibilities like client interaction and managing a team of 4-5 analysts.
The team size usually depends on the magnitude of work assigned to the associate.
A vice president is usually an expert in investment banking with experience in a variety of projects.
A VP is responsible for maintaining client relationships and making sure the operational efficiency at each level of hierarchy underneath.
It is a very senior post in the investment banking domain and can be achieved only after 15-20 years of experience in the field.
An MD is usually responsible for getting more business and converting potential clients into actual deals.
Careers in Investment Banking
Following is a broad classification of services offered within the domain of investment banking:
1. Corporate Finance
In a corporate finance position, you would work towards helping the client raise capital to start new projects or scale up the on-going operations.
The work of the corporate finance team includes recommendations on structuring and identifying potential sources of funds.
As it also includes determining the right balance between equity, debt and securities for attaining higher levels of profitability, the team should have sound knowledge of applied finance and its concepts.
This is the most widespread profile in the investment banking domain, and is usually considered as a foundation of investment banking.
Any successful investment banker, at some point in the career, must have worked in this division for a few years.
2. Mergers and Acquisitions
The team here is responsible for servicing the client on a strategic level and acting as an advisor in facilitating valuation, structuring and negotiations of the deal.
This division is one of the major sources of revenue for investment bankers across the globe.
The team here needs to have strong financial modeling skills to be able to derive insights that are financially and strategically sound.
It is often very difficult to start off a career in investment banking in this profile.
A candidate needs to have at least 4-5 years of hands on experience in financial services before getting an entry in this profile as the work involves a lot of strategy building, which requires enough exposure to various facets of financial management.
3. Capital Markets
It includes both equity and debt markets, where the team advises the client on the most appropriate time, valuation and form of issuance.
Often the investment banks also help their clients in issuing funds in the market.
This involves in-depth understanding of the capital market and its volatility.
An aspirant looking for a career in this profile needs to be strong in financial, securities and derivatives analysis.
It is usually the starting profile for most of the investment bankers around the world. An aspirant can join as an analyst in this profile and then can take off in various streams within investment banking.
4. Sales and Trading
The team, on behalf of the clients, is responsible for undertaking transactions in equities, currencies, bonds etc. with other institutional investors and traders.
It is one of the most desired jobs in investments banks and requires a robust understanding of financial instruments, capital markets, options futures and derivatives.
As it involves verbal and organized, written interactions at all levels, interpersonal and communication skills are of vital importance.
Growth in this profile is among the fastest in investment banking profiles.
Consistency in performance is of utmost importance for an investment banker to move up the hierarchy in this profile.
An analyst can become a senior associate in a very short span of time as the performance is very easily quantifies in such a profile.
Equity and debt research, financial restructuring, public finance and project finance are a few other, amongst numerous, services offered by investment bankers to their clients.
All these services require high inclination towards financial analysis and number crunching for building a successful career in investment banking.
Are You Ready To Rock?
There you have it: a complete blueprint to investment banking success…
Don’t just click away. Check out this interview guide on banking interviews right now.
If you have any questions — or have some personal experience to share from your investment banking career — please leave a comment below.