Investment banking is a large recruiter of graduates each year and clearly is much sought after, with the sector having some of the highest graduate starting salaries and the prospects of a rewarding and prestigious career. The industry is, therefore, extremely competitive to break into, with 200-250 applicants for each position for the most popular business streams at the largest banks.

Smart and tactical job hunting combined with a dedicated approach is key to getting hired.

Investment banking sectors

Front office

This involves direct engagement with clients and market participants. Activities include mergers and acquisitions and corporate finance. It also involves research, which involves analysing companies and markets and sales and trading activities across fixed-income, foreign exchange, equity, and commodities markets.

Middle office

This involves services such as treasury, compliance, and risk management for professional clients. Internal capital flow and risk management functions monitor and analyse levels of risk and liquidity within the investment bank itself, which ultimately determines the scope and limit of front-office activities.

Operations

This critical area involves services, including the ‘behind the scenes’ operational activities that enable the bank’s services to run smoothly. These include the processing, settlement, and reporting of trades. Technology support, development, and programming also fall into this critical area.

Students may naturally look to apply for front office positions but remember that these are the most competitive. The middle and back offices are less competitive to enter and can still offer attractive salaries and promotional prospects without the level of pressure found in the front office. Furthermore, if the world of transaction processing, Fintech, and project management potentially interests you more than sales and trading or corporate finance, then the middle and back offices are worth further investigation. Indeed, a vast array of sectors, companies and jobs worth considering touch investment banking by firms that service this industry. The financial career landscape blog is a good place to start researching this.

Names of different divisions can vary at different firms. Furthermore, many job titles may have different meanings at different firms within this range of functions. To help you make a start in researching potential Investment Banking career areas, you may like to consider how much risk-taking (appropriate for a trading role), how much persuasion (appropriate for a sales role), how much analysis (appropriate for a research role) you would like to deal with in your work. Selling a bond or equity new issue to a US institutional fund manager requires great confidence and persuasive ability on the phone and face-to-face.

All the below areas require further research. Your university, and certainly Lancaster University if you study here, will assist you with this voyage of discovery! University alumni are also a great potential research pool to access.

Note: You will need to stipulate which business stream you are applying to for internships and graduate programme applications. Often, no such stipulation is required for first-year spring week applications.

• Sales and trading: One of the two most competitive areas to gain entry into. Ironically, banks have not expanded in this area since the 2008 and 2020 financial crises due to smaller trading balance sheets, increasingly onerous regulations, and technology replacing humans! Traders specialise in sectors such as equities, bonds, foreign exchange, or commodities. You will need strong maths skills to make rapid decisions and handle significant pressure.
• Corporate finance, including mergers and acquisitions, often referred to as IBD - Investment Banking Division, Is also one of the two most competitive areas to enter. You will work in a client or product team, delivering strategic advice for large corporate clients. You will need to be highly numerate, have excellent interpersonal and networking skills and be a team player! The first year will be the hardest working year of your career. This division is a 70 - 80 hour working week!
• Research: You will spend your time focusing on a sector of the equity, fixed income, foreign exchange or Commodity markets, generating investment analysis and recommendations for the bank’s clients using robust analysis, conviction and integrity. Strong maths and written capabilities are needed, as well as the ability to ‘get into the weeds’ of a company and find out what is really going on!
• Operations: It is chiefly concerned with processing the trades made via sales and trading. With a large Investment Bank making 40,000 global trades a day, it is a bigger job than it sounds, given the speed and complexity of today’s markets. However, it is a less competitive area to enter than the front office, although that, in itself, is not a good reason to apply here.
• Risk management: The role aims to minimise and monitor the bank’s risk in the face of market crashes, client defaults, IT failures, and even terrorist attacks. You will need to have a passion for statistical analysis, be able to use complex mathematical models and be a good problem-solver. Risk management is another expanding investment banking sector.
• Compliance and regulation: The sectors are closely related, involving liaising with regulators, making sure the bank complies with the many new rules and regulations, helping train employees and keeping an eye out for questionable trading! You need to like exploring and interpreting the meaning of wording, be comfortable working with large documents often involving many internal meetings.
• Finance: Like any large company monitoring the firm’s profitability, it involves producing financial statements and liaising with external auditors, requiring excellent numerical skills, often using complex mathematical models interacting with other parts of the institution. Finance within investment banking means the ‘accountancy function’.
• Human resources: Investment banks, like any large company, have thriving human resource departments that deal with personnel hiring, performance reviews, remuneration, and more. Human resource experience gives you a very transferable skill set across multiple industries.
• Information technology: Large banks employ hundreds of IT personnel, given that so much trading requires split-second information, and more trades take place via electronic trading systems rather than over the telephone. A large global bank will spend hundreds of millions of dollars on information technology. Again, IT skills and experience are extremely transferable.
• Internships: To understand the investment banking application process, note that many banks consider second-year summer internships as an ‘8-week extended interview process’ and use it as their main recruitment method. In some companies, 80% of their graduate trainees come from interns (the range is generally 50% to 80%). Most large banks offer formal internship programmes to penultimate students in the summer. Such fiercely competitive programmes require early term one (even pre-term one) application. Note: First-year students have the opportunity to apply for mini-internships ‘spring week' which require application almost as soon as you arrive at university! – see investment banking spring weeks. A successful first-year spring week can lead to an immediate second-year internship offer.

Applying for an investment bank graduate programme without an internship is possible, but you will need compelling work experience and exceptional items on your CV.

Quick tips

• Apply early; the sector is known for its early start and closing dates. Most schemes close for application on October 31st, regardless of the website advertised deadlines.
• Targeting Tier 2 investment banks increases your chances of success.
• Have a rigorously developed and formatted CV. See Financial Market CVs document.
• Start following the financial markets via Lancaster University partner Opening City Doors Graduate Market Update. You will need this information at interviews, including first-year spring week interviews.
• Investment banking is known as the ‘sell side’; Investment management the ‘buy side’.
• Be familiar with all Financial Career Insight Series blogs.

Related Blogs

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  The financial career landscape

• 

  Financial company target list

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  Financial market placements

Disclaimer

The opinions expressed by our bloggers and those providing comments are personal, and may not necessarily reflect the opinions of Lancaster University. Responsibility for the accuracy of any of the information contained within blog posts belongs to the blogger.