Investment banking is an important sector responsible for generating capital. Investment bankers assist their clients in making financial decisions. The recent Covid-19 impact has shown its effect in almost every industry. The Investment banking market has to steer through the challenges during this tough situation. There are new and innovative ways being taken by individuals to cope up with the challenges. Let us see the current market situation of Investment banking and future trends in this sector.
Impact of Covid-19 on Investment Banking
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The disruption of staff from office due to Covid-19 has cost investment banks a lot. They have adopted the ‘Work from Home’ culture to deal with this situation. The senior leaders have to cope with the challenges and have to monitor the performance of employees. Asset values are also falling in the present scenario, investment bankers have to cope up with it. The governments are also trying to give fiscal stimulus to companies/firms and are lowering the taxes to gain back the market confidence. Cash flow is also decreasing due to a halt in services, an investment banker has to maximise cash in hand.
Firms have to remotely manage their staff and have to create a work environment somehow. Investment bankers are using digital applications to make their job easier. The usage of technology for ease in doing business is surging. According to a report by S&P Global Market Intelligence, many investment banks reported a year-over-year drop at the end of 2019 due to the Covid-19. Due to the rise in uncertainty in the stock and bond market, market volatility is increasing. Investment bankers have to work through these challenges for sustainability.
Trends and Forecast in Investment Banking Sector
Due to the impact of Covid-19, investment banks are targeting mid-sized companies. There are a lot of mid-sized companies in every country. Due to the high frequency of these types of companies, potential growth is available. New technologies like cloud computing, e-commerce, AI, Machine Learning are redefining the way investment bankers worked. Many investment banks are increasing their institutions’ engagement on social media platforms to increase interaction with clients remotely.
The usage of data analysis is also trending in the Investment banking sector. Data analysis is used to analyse any financial decision and generate profits. Due to Covid-19, a lot of companies/firms have shifted to online work. Investment bankers are investing in cybersecurity companies because their demand is going to increase. Every company wants its data to be protected and with fall in manual work processes, cybersecurity services are being demanded.
The current global market of Investment banking is more than $250bn. The average industry growth is around 2.3% in the past five years. Investment banking may be impacted by the Covid-19 crisis, but individuals and financial institutions have coped up and made sure the business survives. There are a lot of fluctuations in the market, so prediction and investing in correct ventures is important.
It is predicted that the investment banking and brokerage market will grow in 2020-2027 and the leading players would be JPMorgan, Goldman Sachs. Digital banking is been predicted as the future of banking by 2027 and a lot of investment banks have taken the first step and have shifted various services to a digital medium. There will be a lot of chances for upward mobility in the Investment banking sector in the coming years.
Investment banks and their employees are managing their roles remotely and are coping up with the challenges laid by the Covid-19 impact. The capital has to be generated for the continuation of the business. A lot of new opportunities are also opening which are being grabbed by many key players in the Investment banking market. This article was about the impact analysis of Covid-19, trends, and forecasts in Investment banking.