Investment banking is a unique type of banking operation. It helps customers, individuals as well as firms to raise capital and helps them with financial consultancy guidance. Many times, investment banks also assist their clients in managing their various financial assets like Debt Funds, Real Estate, Equity Funds, and many more.
Investment banking acts as a mediator between investors and security issues and enables new companies to go public. They buy all the available shares at a price decided by their seniors and then they resell those shares to the public or just sell their client’s shares and make a commission on each share sold.
Investment banks also assist firms linked with alliances and acquisitions and then provide support services like Derivatives Trading, Market Making, Fixed income instruments, Foreign Exchange, Equity Securities, and Commodities. An investment banking career is highly demanding, but the lifestyle and the pay it offers, simply cannot be neglected.
In this article, let’s understand about what investment bankers actually do.
Job Role & Duties of an Investment Banker
- ✔️Helping corporations raise funds by making them go public with sale of company shares in the stock markets in the form of IPOs (Initial Public Offerings).
- ✔️ An investment banking career demands of you to perform financial modelling to find out a company’s market valuation, before it goes public.
- ✔️ Bankers help determine the optimum stock price for the company entering IPO to avoid under subscription.
- ✔️ Offer expert assistance to businesses across industries with M&A (mergers and acquisitions) deals.
Prerequisites to Starting an Investment Banking Career
Breaking into the investment banking sector is not a tough nut to crack, but surviving in the said industry, probably is. The educational prerequisites are pretty relaxed. A bachelor’s degree in finance or a related subject discipline would suffice, however, people prefer acquiring an MBA to get a smooth entry into the lucrative industry.
Because the competition is intensely high for investment banking jobs across the globe, coming from a top-tier university or business school certainly offers you a distinct competitive advantage. Aspiring investment bankers will never go wrong with a top-rated college or university imparting education in finance, as these are the places big banks recruit new employees from.
In-demand Skills to be an Investment Banker
Doing online investment banking course will more or less offer you the knowledge missing in terms of requisite skills. But, apart from the core financial skills that you can learn by enrolling into industry-relevant investment banking courses, there are other vital skills that you need to work upon to join a reputed investment bank. These comprise:
| Wisdom: A strong grasp on subjects such as mathematics, economics, and finance will help throughout your investment banking career. Areas of learning that will help you develop intellect and problem-solving skills would comprise — physics, engineering, economics, mathematics, finance/accounting, science, and certification programs like Chartered Investment Banking Professional (CIBP™) certification offered by the Investment Banking Council of America (IBCA).
| Discipline: The outside world of investment bankers seems highly luxurious and lavish. The news portals report their sky-touching earnings, their business-class international travel itineraries, and all of the luxuries available to their disposal. But, a little gets reported about the diligence, long hours, hard work, and discipline. Bankers, starting right from entry-level analysts to the higher management personnel, operate in a high-pressure work environment in which most of us would fail to thrive in.
| Professional Bonds: This skill seems like a secondary skill for a banker, but is considered among the most valued skills in the investment banking domain, especially to climb up the hierarchical structure fast. Social and soft skills, such as emotional intelligence, positive attitude, and being cordial, matters a lot in the said industry to achieve success. Eventually, investment banking industry earn money by charging advisory and facilitation fee to their wealthy clients, and therefore good interpersonal skills play a vital role in retaining clients.
Most of the graduates begin their careers as Investment banking analyst. After 2 to 3 years of experience, they get promoted to associate position. Individuals with an MBA degree can be given the option of direct entry at the associate level. Again, after this promotion and experience of additional 3 to 4 years, they get promoted to Vice President (VP) level. They regularly communicate with customers and can have their own clients. The next step is to become a director or executive director, which is not an easy route but requires a lot of dedicated approach and work profile.