The world never saw what was coming. The Covid-19 pandemic has impacted the global economy and the Indian economy. The downsizing and disruption of small and medium-sized enterprises, establishment of new business model and the business continuity plan, excessive demand and adoption of digitalisation and introducing a high standard of digital transformation like AI, Cloud computing, SaS and many more such trends were visible for quite some time in 2020 and also extended to 2021. The services like loan advancements, remittance, credit and debit cards, payments, investment management, risk management, raising capital and others were massively affected which resulted in crises of banks. This forced the possibility of revolution. The banks had to come up with alternative actions to regain the profitability margin.
Several operating divisions like commercial banking, retail banking, investment banking transformed to cope up with the Covid-19 crisis. Multiple challenges have affected revenue generations because of interruption in services, social distancing and digital mode of service offering. The investment banks specifically needed to take immediate actions as specified below.
- The services and offerings have to be digital, also known as touchless mode of operations
- Introduction of Artificial Intelligence and software that offers quality data and insights to drive company growth
- Offering self-service and smooth interface to enhance the experience of online platforms making it easier for customers to access
- Strong Infrastructure that can withstand or foresee risk also known as resilience
Based on the mixed impact on the Investment banking platform and how different firms responded or continue to respond to the Covid-19 crisis, it is expected that this division will undergo some permanent changes like the adoption of Cloud Technology and mutualisation of services through partnering with fintech companies; risk management which is majorly taken care of by the digital technologies; adaptation of new client engagement models because of a hybrid working ecosystem- virtual collaboration is trending.
To keep up with these permanent changes in the business model and succeed in the post-covid era, investment banks need to accept and adopt digital transformation and build resilience to avoid such global attacks in the future.
Just to have an idea of how investment banking works, we will highlight the top two ways to give an overview of their functionality.
- Mergers and Acquisitions: An investment bank will evaluate the companies and identify the strengths of each division which allows the M&As to happen at a fair price and in return the bank gets a certain percentage of the deal as their fees.
- Initial Public Offering (IPO deals): An investment bank helps set the price of the offerings going public for the first time and get enlisted on the stock market. They market it proactively to their clients and earn a commission on the raising capital.
There are other ways of how investment banking works such as Private Wealth Management, Prime Brokerage and Proprietary trading and these are as popular and revenue generation oriented as the other ones.
Investment banking is one of the highest paying jobs in the world of finance. Investment bankers usually make 30-40% higher salaries because such banks are more profitable compared to other management firms. Investment banks deal at an institutional level with big tech firms, global or national banks. Having a curiosity to know about this industry is good but also is important to know what do you learn in investment banking. You do not require any specific degree to learn investment banking but having said that, some skills in economics, mathematics, business and finance will add to your benefit when you are in an interview. An investment banking certification course will introduce you to several subjects like financial modelling and accounting, risk management and market analysis.
You may enrol yourself for a program like Certified Investment Banking Operations Professional that offers you investment banking certification which will help seek clarity on what you learn in investment banking. Once you have an entry into the industry, you can only see yourself flourish and achieve a future that you dreamt of.