Investment banking is specialised aspect of banking aimed at raising money for high-net-worth individuals, massive corporations and even governments. Investment banks basically acts as an intermediator between corporations and investors for mergers and acquisitions, underwriting for new IPOs, they even provide financial consulting to large corporations regarding their new investment ventures by doing risk analysis and financial modelling. Investment bankers often handles the finances of ultra rich individuals and make sure that their money is invested efficiently to assure returns.
In United Kingdom the major players in the investment banking sector are HSBS, Barclays, Goldman Sachs, J.P Morgan, Morgan Stanley etc. They provide services like Mergers and Acquisitions, raising capital, quantitative analysis and trading, risk analysis, finance advisory etc. to make sure that the money making never stop for their clients.
Recent trends in the Investment Banking Landscape
The most prominent trend that has been observed in the Investment Banking domain is the tremendous increase in Mergers and Acquisitions which can be attributed to the recent tech revolution. The requirement of mergers and acquisitions has increased between investment banking firms and major tech firms due to the amalgamation of various domains with latest technologies in artificial intelligence and digital transformation. Major players in every domain are looking to collaborate with the investment banking firms may it be healthcare, ecommerce, entertainment, supply chain etc.
Inclusion of ESG (Environmental, Social and Governance) considerations is another emerging trend in the Investment Banking sector as due to the increase in awareness about climate change and social inequality the investors seek more accountability, transparency and social responsibility from the investments firms. As a result, inclusion of ESG factors is more or less a mandatory requirement these days.
What they do?
Investment banking offers a plethora of services like finance advisory, Capital markets, Underwriting and syndication, Sales and Trading, Risk management and hedging, Regulatory compliance, Structured Finance and securitization etc. These all services are focused on one goal capital raising which just means making money.
Investment Banking just doesn’t play an important role in moving the capital markets it moves the whole economy of a nation. Corporations pay tons of money for these services as there sustainability and profitability depends fundamentally on how much capital and they can raise and how well their decisions are made to either buy or sell their shares. Risk analysis and hedging services makes sure that the trade that any individual or organization is getting is at the minimum risk and have a high probability of making profits in near future.
In very layman terms it is basically the business of enabling the corporations and the high-net-worth individuals make more money with their capital and if you are someone that can facilitate that, congratulations you are on your way to make a fortune for yourself.
How to break into this sector?
Investment Banking is the go-to domain for individuals with good finance knowledge, data analysis skills and deal making abilities. There are plenty of direct and indirect ways in which anyone can leverage these skills to make either a career or a successful business in this elite domain.
Let’s discuss some these ways in which you can break into this niche and earn a lot of money using the skill set required:
Career in Investment Banking: If you have decent knowledge about finance domain along with the skills to analyse data and ability to crack lucrative can make a very handsome salary and earn huge incentives by being an investment banker and work for a prestigious investment banking firm.
Entrepreneurship: If you are someone from the Investment Banking background and some years of experience under your belt than you can start your own venture providing the investment banking facilities like merger and acquisition services, capital raising for start-ups, technical analysis services etc. to help the businesses and the individuals raise capital and earn huge profits from it.
Consulting: Investment Bankers have an in-depth knowledge about the corporate finance, mergers and acquisitions, financial restructuring and capital markets. This knowledge is actually a VIP pass to the financial consulting realm where you can consult corporations, financial institutions, private equity firms providing consultation for financial modelling, financial valuation and capital allocation.
Investing and Trading: To be honest every literate individual is familiar with the glamour of the investing and trading domain. If you have the knowledge financial markets, asset classes and have the analytic ability to understand and extrapolate patterns in shares, derivatives, futures and options you can create your portfolio, do trading in stocks, futures and options to generate amazing returns on your investments.
Content creation: In the present age of digital media individuals with thorough knowledge of finance domain, analytics skills and clear understanding about the market trends can monetize their knowledge through blogs, podcasts, videos or social media. This can serve as endless source of passive income if you know about three things finance domain, data analysis, and digital marketing. These three skills can make you financially independent in no time at a very young age.
Quantitative analysis: If you are someone who is gifted with the curiosity and drive and have the mathematical ability to analyse shares, futures and options you can combine this skill set with the knowledge of coding and can become quantitative analyst for major hedge fund companies and algorithmic trading firms. This is the most sought-after skill in the finance domain and people with these skills are easily making millions in a year just as salary. The field is tough but the rewards are worth the effort.
There are endless possibilities in the Investment Banking domain as it is one of the most elite domains to work. Every Investment banking firm is willing to spend millions for the right talent as it is the Investment Bankers who do the heavy lifting in these expensive deals among the corporations. If you are controlling the flow of money, you are controlling world around you. Your perseverance and intellect can take anywhere in any field. So, keep learning and keep exploring.
