New Trends in Investment Banking Hiring Patterns and Fintech

Finance and Banking industry is changing for good.

From physical exchanges to algorithmic trading and emerging robot-advisors, the industry is adapting to a new crop of technologies to accomplish everyday functions. Cloud computing, Artificial Intelligence, Machine Learning, and Big Data, are the buzzwords disrupting investment banking hiring trends, operations, and deal-making.

We take a look into the future of banking and changes confronting the industry. Before that, here is a quick roundabout of the fundamental functions of investment banks.

5 Functions of Investment
Banks

Investment banks are the most complex, riskiest, and shiniest among all types of banks.

Ever wondered, what do spotlessly kitted-out investment banking professionals actually do? Whether one is an analyst or an associate, their functions largely center around five main areas:

1) Trading

Trading at investment banks constitutes salespeople who execute orders and sell products to investors. They sell securities, commodities, equities, bonds, and other products of the firm. Sales & Trading is one of the vital functions of investment banks. If an investment bank can’t trade successfully, it becomes difficult to survive, keep clients, and make money.

2) Market Making

It is one of the crucial functions. For any market to thrive, it needs both buyers and sellers. If a buyer wants to buy shares in a stock, there must be sellers willing to trade. Investment banking professionals act as market makers ensuring liquidity in the market.

3) Mergers & Acquisitions

It is one of the fundamental transactions for companies to grow by mergers or acquisitions with competitors. Investment bankers offer advice to clients looking for M&A, help them in structuring the deals, and perform due diligence on behalf of clients to successfully complete the M&A process.

4) Capital Raising

When an organization wants to raise funds, it does so by issuing shares or bonds. Investment banking professionals help them in this pivotal function. Bankers help organization via two ways in this process offer advice and find buyers for shares, and underwriting, i.e. buying the shares of the offering company by itself for a percentage of the fee.

5) Structured Products

These products can differ from banks depending on the professionals and innovation. These products can range from securities to a basket of idiocies, commodities, and issuances, that are sold to the clients, i.e. public or organizations.

What’s new?

In 2000, Goldman Sach’s employed 600 traders in New York HQ for buying and selling of stocks on behalf of clients. In 2017, there were only two equity traders.

Trading is now done by computers than people. Much has changed in investment banking industry over the years. Let’s have a quick look at the changes in outlining investment banking operations.

Shifting Hiring Trends

Investment banks are beefing up their hiring for computer engineers.

Professionals from cross-industry are being hired. Head-hunters at the largest of investment banks are acquiring talent from tech companies such as IBM and Microsoft.

JP Morgan has over 50,000 technologists, which is larger than even Twitter and Facebook combined.

As investment bankers look for engineers, AI experts, and data scientists to join forces, investment banking aspirants will also need to augment their understanding in these areas.

High-Frequency Trading

Algorithmic trading, now used for trading instead of traditional open exchanges, can conduct buying and selling through a predefined set of instructions through computers.

High-frequency trading is a type of algorithmic trading wherein numerous stocks are bought and sold within seconds. HFT is gaining traction and becoming popular in most large banks, as it is also helping them headcount.

Automated IPO

An important event in the lifecycle of a company, going public, is also being automated.

Goldman Sachs mapped out 127 total steps that it takes to execute an Initial Public Offering (IPO). The bank proposed that over half of these steps can be executed by computers.

As a result, Goldman Sachs developed an AI system Deal Link that arranges and tracks a slew of legal diligence and reports required for a successful IPO.

Going tech-heavy

Many other innovations at investment banks are also focussed on automation and technology such as AI virtual assistants, among others.

These are the times of fintech and require investment banks to power their structured products, M&A processes, and other functions with technology. New technology allows legacy banks to transform, modernize, and become flexible and lightweight.

Investment banking is no longer only about business management and finance. It is increasingly becoming tech-savvy. If you are aiming to carve out a career in investment banking, earning globally recognized and industry-reputed credentials in investment banking can keep you at the forefront of the latest innovation.