Investment banking industry emerged in India back in the 19th century. During that period, trading industries were established in the country by European banks. This led to many international banks showing interest in investment banking in India. However, in 1970, SBI started to spread its wings and then various national banks joined in this wave of business. In 1990’s, investment banking became one of the most sought-after industries in India. An extensive list of banks is now set up in India and offers a gamut of services like mergers and acquisitions, debt syndication, capital management and more.
The go-go period of investment banking that began in the mid-1980s and sustained up to the financial crisis appears to be on its way out, as the bigger banks shrink due to regulation and smaller, more focused firms, funds, and start-ups take a more significant share of the market. With changing time, various factors will shape the future of investment banking in India.
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Investment Banking Trends
- Regulation: Regulation of the banking course in India will result in the flourishing of boutique investment banks as it helps them lure the senior bankers with cultural advantages of a more open partnership structure which the bigger banks had to give up when they went public. Additionally, they can also offer lesser overheads, fewer red-tape worries and bigger payouts on the principal amount. However, this growth will not be permanent and will be dependent on the financial abilities of the more prominent banks.
- Technology: Emerging technology is one of the factors that will have a tremendous impact in shaping the future of investment banking in India. Digitalization, AI, big data, mobile technologies, augmented and virtual reality will fast change the banking course across all financial sectors. E-trading has become the dominant technology in financial areas, hence, there is an urgent need to reform multiple trading platforms and investment banking IT systems. Technology will also promote safer work environments, enhance the customer experience and increase productivity.
- Infrastructure: A wave of new infrastructure schemes and programs has caught the attention of investors. From India to the USA, governments believe that spending on infrastructure will lead to domestic financial growth. There is a particular political interest to invest in infrastructure projects. Even investors are convinced easily to invest in such projects. Real estate and energy-related infrastructure spending are bound to make a significant impact on the future of investment banking in the country.
- Future generation: Millennial makeup about 50% of the world’s population. People under the age of 30 are referred to as millennial. Their production makes their norms and has grown with and adapted to the ever-changing technological era. They are digital natives with a different mindset and priorities as compared to their older generations. They will impact the banking course in India by evolving as mature investors who value a fun-oriented but, conscious lifestyle. They will innovate and form more effective and modern ways of investing and overthrow the conventional methods.
As time progresses, the more traditional and old ways of investment banking will be replaced, and a new wave of technology, population, infrastructure, analytics, customer experience, artificial intelligence, virtual and augmented reality and so on will take over the world of investment banking. To emerge as a global leader in finance, India needs to be more open to accepting these changing trends. These factors will not only guarantee success in the worldwide arena but will also enable the citizens to overcome various socio-economic issues and rise with the country.
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