An investment bank, or an investment banking division, is fundamentally a financial ‘middle-man’ that acts as an interface between clients and investment markets. The client base comprises corporations, governments, hedge funds, pension funds, and other financial institutions. For them, investment banks perform a range of large and complicated financial transactions, including:
- equity research
- mergers and acquisitions
- retail and commercial banking
- raising capital
- security underwriting
- sales and trading.
Investment banks consist of three main departments: front office, middle office and back office. Each department performs a unique function that helps the bank to make money, manage risk and remain operationally sound.
Front office includes investment banking, sales and trading, and research. This is where the money is made. Middle office comprises risk management, financial control, corporate treasury, corporate strategy and compliance. This division regulates the bank and its activities. Operations and technology make up the back office and, in essence, support the front office.
The financial crisis in 2008 ripped through the investment banking arena, taking down the fourth-largest investment bank in the US – Lehman Brothers Holdings Inc. The industry is still recovering from the crash even now.
However, more than just repairing what was broken, investment banks are adapting to stricter regulatory controls, realigning their business strategies, strengthening ties with clients and optimising technology.
Bright, committed and resilient graduates continue to be sought by investment banks, which understand that today’s learner could be tomorrow’s leader, helping to navigate the business through boom and bust periods.
Most investment banks welcome graduates from all academic disciplines. However, understandably, a prerequisite for most technology divisions are technical degrees or degrees with a significant IT component. There’s less flexibility around degree grades, with a 2.1 or higher often being compulsory.
Of equal importance to employers are relevant skills and a genuine interest in the industry. Although graduates receive full training, investment banks set out competency requirements for each entry-level position and they expect applicants to be genuinely interested in business and financial markets.
Most graduates begin a career at their chosen investment bank(s) with an eight- to ten-week internship, usually completed during the summer of their penultimate year of university. It’s common for investment banking employers to hire graduates that they have got to know via an internship.
However, students have the opportunity to become acquainted with the industry and a career in finance a lot earlier. Some employers hold week-long spring insight programmes aimed at students in their first year of university.
Typically, graduates start out as analysts, where they will receive guidance and on- and off-the-job training in major cities, such as London and New York. Graduate recruits will be expected to learn and progress quickly, demonstrating their intellectual capacity.
Opportunities will swiftly become available to interact with clients and assume responsibility for collating and integrating data into presentations and reports. As graduates gain more experience and excel in their assignments, they’ll typically progress to senior analyst or associate.
- Communication/interpersonal: the ability to form and foster effective relationships with colleagues and contacts.
- Intellect: the ability to grasp and learn new concepts quickly.
- Innovation: the potential to create or identify new opportunities to help develop the business.
- Resilience: able to work well under pressure and with conflicting demands.
- Global outlook: the ability to operate in an international context.
- Technical literacy: primarily for technology roles.