Investment Banking: Definition, Study Material, And More.

Investment banking is one of the most lucrative jobs. If you are also planning to make a career in investment banking, then you are in the right place. Before stepping into becoming an investment banker, let’s first understand what investment banking is. Investment banking is a job profile that deals with high-end and complex financial transactions such as IPO listing.

To put it simply, investment banking largely revolves around raising capital for corporations, governments, and other entities. People working in investment banking are also involved in complicated financial transactions such as corporate reorganisations, mergers and acquisitions, and broker trades for institutions and private investors.

How To Get Into Investment Banking?

Investment banking is one of the most competitive fields and is equally rewarding. Below are the basic requirements that you need to have in order to make a career in investment banking:

Important Skills To Have:

Analytical Skill

In order to excel as an investment banker, it is important for you to have the ability to think analytically. Roles and responsibilities in investment banking revolve around analysing financial statements, trends, and other data. Hence, it is important to develop the capacity to think analytically.

Financial Modelling

Financial modelling is an essential skill set that an investment banker should have alongside analytical thinking. Investment bankers use financial models to analyse companies’ financial trends and statements. They also use financial models for vertical and horizontal analysis and financial projections.

Confidence

Another skill that is paramount in investment banking is the ability to exude confidence. This ability plays a critical role not only in investment banking but also in every aspect of life. When dealing with clients or going for negotiation, you must be confident about your research and advice.

Decision-Making

It is a must to be able to make quick and wise decisions. Investment banking is a high-pressure job in a fast-paced environment. You should be able to make quick and wise decisions on behalf of your clients.

Quantitative Skills

Investment banking is all about how good you are with numbers. You should be able to make quick calculations and have a solid foundation in basic mathematical concepts. If you are not good with math, it’s time to improve your mathematical skills.

Essential Qualification To Get Into Investment Banking?

Earn a Bachelor’s Degree

The first thing to do is to have a bachelor’s degree in business administration, finance, or statistics. While pursuing your bachelor’s, ensure you gain experience through internships and part-time jobs before completing your degree. Also, ensure you get into a top-tier college, even for a bachelor’s degree, if you are looking for a career as an investment banker.

Go For Certifications

For the next steps, get all the necessary certifications related to finance done. For example, NISM certifications can work wonders in landing you a job or an internship in India. But, this will not be enough for you to enter into investment banking. They might give you a preference in the interview. However, certifications like CFA, FRM, etc., are a must for anyone looking to make a career in finance, especially in investment banking and equity research analysis.

Pursue Your Masters

The final step is to complete your master’s. Certifications like CFA can surely land you a high-paying investment banking job. But pursuing an MBA from an IVY league college, such as Stanford, Warton, etc., can add the cherry on the cake. An MBA degree can provide you with more flexibility and managerial job positions.

What Is The Career Trajectory In Investment Banking?

One of the major concerns while deciding on our career has always been its progressions. Investment banking is one of the most lucrative fields and has very good career progression. Let’s see what ranks a person can climb in investment banking:

Analyst

If you join an investment bank right after your bachelor’s degree, you will join the backend team, where your primary task will be developing financial models and analysing companies, financial trends, financial transactions, and any other task as may be specified.

Associate

After working for a few years as an analyst, you will be promoted to the rank of associate. Their job profile is akin to that of an analyst with additional responsibilities. They have to work very closely with the analyst, who checks their work and assigns them new tasks. After working for three and a half years as an associate, you will be promoted to the rank of vice president.

Senior Banker (VP, senior VP, and MD)

Senior Roles in investment banking focus more on management than on analysing and building financial models. They could be anyone from an investment banker to a top-tier corporate executive. The job profile mostly involves bringing new business to the firm/bank and maintaining relationships with existing clients. As economic environments shift, they anticipate when companies will need to raise capital or when strategic discussions (M&A, LBO) are necessary.

What Are The Best Study Materials For Getting Into Investment Banking?

Apart from having the above-mentioned skill set, you must have a passion and a deeper understanding of finance, economics, and business to get into investment banking. Below are some of the best study materials that you can refer to:

Books

Books are the best source for gaining financial wisdom. Below are the top 12 books that you can read to deepen your understanding of finance and investment banking:

Investment Banking: Valuation, Leveraged Buyouts, and Mergers and Acquisitions
Investment Banking for Dummies
The Business of Venture Capital
Financial Modeling & Valuation: A Practical Guide to Investment Banking and Private Equity
Investment Banking Explained: An Insider’s Guide to the Industry
Investment Banks, Hedge Funds, and Private Equity
Middle Market M & A: Handbook for Investment Banking and Business Consulting
The Best Book On Goldman Sachs Investment Banking Jobs
Investment Banking: Institutions, Politics, and Law
The Best Book on Investment Banking Careers
The Accidental Investment Banker: Inside the Decade That Transformed Wall Street
The Business of Investment Banking

Courses

Courses are another important resource that can give a better and broader view of investment banking. Completing these courses will not only improve your understanding but will also make your resume shine. Below is the list of some top courses that you can consider studying from:

Financial modeling From Corporate Finance Institute
Advanced Valuation and Strategy – M&A, Private Equity, and Venture Capital Offered by: Erasmus University, Rotterdam
Private Equity and Venture Capital Offered by Bocconi University
Wall Street Mojo’s Free Investment Banking Course Offered by: Wall Street Mojo
Advanced Valuation and Strategy – M&A, Private Equity, and Venture Capital Offered by Udemy
Introduction to Valuation and Investing Offered by Khan Academy
M&A Science Academy Offered by: M&A Science
International Mergers and Acquisitions Expert Offered by: Institute of Mergers and Acquisitions (IMAA).

Websites

To excel as an investment banking associate or an analyst it is important that you should stay updated with the latest industrial trends and economic developments. Below are the websites that you can refer to:

Wall Street Mojo
Wall Street Journal
HBR (Harvard Business Review)
The Wall Street School
Mergers and Inquisitions

Wrapping Up

Investment banking is the dream of many, but few live it. The above list of resources and steps is not exhaustive; however, they can provide you with a better understanding of the field and will surely deepen your knowledge of finance.

FAQs

What are the exit opportunities in Investment Banking?

Private equity and growth equity, Hedge funds and asset management, Venture capital, corporate finance and corporate development, and startups and entrepreneurship are some of the exit opportunities in investment banking.