+91 9580 740 740 WhatsApp

Importance of An Investment Banking Degree For Career Growth

An Investment banker’s occupation is much esteemed and similarly challenging as their work involves carrying out large complex financial transactions for diverse business organizations. Investment banking for very long has been playing a crucial role in shaping the business landscape of our mushrooming Indian economy. The investment banking industry is a multi-billion dollar industry, and there is a huge presence of both Indian and global investment banking firms in India today. Given this scenario and as investment banking has a very assuring future in India and around the world, it is a prudent career to opt for. But to chart out a long-term future and be an important player in the industry, aspirants must not underestimate the importance of an investment banking degree. A degree or a coveted short-term certification will give investment banking professionals an edge in the industry and are likely to be more preferred for the job than others who do not have a proper investment banking degree. This article throws light on the various aspects of Invest banking sector, an Investment banker’s role, and the importance of an investment banking degree to make a mark in this sector.

IMPORTANCE OF AN INVESTMENT BANKING DEGREE-compressed

What Is Investment Banking?

A specific section of banking that enables companies to raise money employing complicated arduous financial transactions like mergers and acquisitions, wealth management, initial public offering (IPO) underwriting, asset management, reorganization, sales and trading, etc. is termed Investment Banking. Investment bankers also give constructive advice concerning the offering and placement of stock. Every business corporation that plans such large and complicated financial transactions uses the services of investment bankers to chart out their investment strategies to employ their resources and time in the best possible manner and minimize the risks attached to such transactions.

It is important to note that Investment banks are different from corporate banks, which are pretty distinctive and primarily deal with the day-to-day regular financial activities of companies intending to amplify the valuation of an organization for all of its stakeholders. A few of the top investment banks presently operating in India are BNP Paribas, Barclays Bank PLC, Credit Suisse Securities (India) Private Ltd., JP Morgan India Private Ltd., SBI Capital Markets Ltd, and Deutsche Equities India Private Ltd., These companies are either affiliated of large banking institutions or are their subsidiaries.

Also Read,

Why Become an Investment Banker?

Investment banker’s work is very mentally stimulating and extremely challenging. The experience and the opportunities the occupation provides along with the potential of high pay packages is what draws many people to this job. A few important reasons are elaborated on below:

Specialized Field – As a beginner one is most likely to start work with basic investment banking, however, you will in due course move into more specialized fields like underwriting, mergers and acquisitions, trading, sales, and so on. The specialized skills achieved will make you a domain expert and you will be in high demand in the investment banking industry.

Challenging Job – Investment bankers deal with very complex financial modeling assignments from the start of their career and this sets in a mentally stimulating work atmosphere. As you advance in your career, the job develops to be even more challenging than earlier and opens the door for more and more opportunities. These influential factors should be reasons enough to motivate you to become an investment banker.

Constant improvement – The investment banking field is very dynamic and you get to learn something new every day. A brand new knowledge arc is created with each different client for you as their portfolio and necessities are different from each other. Investment banking is a very appropriate career for all those who are extremely passionate about exploring newer and deeper areas in their domain.

High Pay Packages – One of the most attractive features of an investment banker’s job is the high pay packages they earn as compared to their peers in other similar financial profiles. Apart from their regular fixed pay, they are given generous bonuses and lucrative perks whenever they close a big deal. High pay is definitely a big motivating factor for any job profile.

Networking prospects – Investment bankers also get to interact and work with a wide range of important heads and CEOs of various organizations from diverse areas of management. These networking prospects usually pave the way to further educating and growing chances in the investment banking sector.

Opportunities in the Investment Banking Sector

Over the last two decades, India has seen a tremendous positive shift in the investment banking sector in the country. India is home to numerous top multinational companies and has a presence of thousands of start-up companies across various sectors. India is poised to become a five trillion dollar economy in a few years as per the economic outlook projections. Understandably, India has become a sought-after destination for all large investment banking firms as there is a huge demand for their services here. India has the presence of virtually all top global investment banking firms in the country.

At present, there are more than 176 Investment Banks in India both Indian and Global. The investment banking sector is consistently rising in the country and is also witnessing fresh trends such as the growth of a new class of assets and the origination of digital investment banks. Naturally, there is a noteworthy increase in the demand for investment banking experts and professionals in India.

Presently, all the small and big business organizations in India are aggressively seeking investment banking services for several activities like fundraising, mergers and acquisitions, expansion of their organization, asset management, wealth management, restructuring, etc. This has driven the requirement for investment banking specialists in the country and accordingly, there is a huge wave of job opportunities in the investment banking field in India.

These investment banks are naturally going to expand and have a thriving future in the country owing to India’s dynamic economic and business ecosystem. Therefore, it is indeed a very favourable time for people looking to foray into the investment banking field in India with abundant opportunities available. Holding this viewpoint, this article about the importance of an investment banking degree has been carved to help individuals seeking to enter this field, make a more informed choice.

Role of an Investment Banker

An investment banker uses his proficiency, analytical capabilities, experience, and negotiation skills to help businesses raise funds. In essence, investment bankers stay closely accustomed to and are up-to-date about the current investment scenario and trends in the markets and the economy as well. Organizations look to investment bankers for expert advice on their growth strategies.

Investment bankers, after due valuation of the current economic situation of the organization, give recommendations and assist them in navigating through the complicated domain of large finance using their proficiency in the field. Furthermore, before an organization moves ahead with a certain project, it consults an investment banker to recognize the risks associated with it to enable it to protect its resources. An investment banker also assists businesses with their financial instruments pricing and regulatory framework.

Recommend Read,

Responsibilities of an Investment Banker

An Investment banker’s primary functions can be categorized into two main functions, The first one from the buy side, where investment bankers offer mainly advisory services, like giving recommendations on which securities to invest in or buy to meet their financial objectives, and the second one is sell-side where they facilitate the sale of securities, for which they are accountable to find right investors to buy the securities being sold to raise the required funds for their client. A few standard responsibilities of investment bankers are as follows:

  • Mergers and acquisitions (M&A): M&A facilitates interested companies in the process and the transactions for either merging with another company or buying, completely taking over another company.
  • Issuing and selling securities: It is the procedure of generating new assets that can be traded like bonds, stocks, and options, and in the future whenever the need arises marketing the same for fundraising.
  • Underwriting: It is the procedure to raise capital by investment banks in the method of equity or debt for their clients.
  • Initial public offering (IPO): Assisting their clients to become a publicly traded company from a privately owned company.
  • Prospectus drafting: It involves preparing a document with comprehensive details about an investment offer which includes the purposes and the risks involved in the investment.
  • Equity research: Collecting all the useful insights from the market by analyzing the present market and industry trends and patterns to facilitate investors to make informed decisions.
  • Asset management: It involves managing the portfolio of assets of a high net-worth individual or an institution and guiding him/them on all of their financial decisions.
  • Corporate restructuring: It is the process of giving professional expert advice to companies on various options and alternatives to modify the financial plan to increase their capital.
  • Book building: It is the procedure in which an investment banker makes decisions on the share price of an IPO (Initial Public Offer).

Importance of an Investment Banking Degree

As a general practice, a degree in investment banking is not compulsory or a strict requirement to get recruited in the industry. However, the importance of an investment banking degree should not be undermined as a relevant educational background can have several benefits. The three most important factors that emphasize the importance of an investment banking degree are as below:

Symbol of Recognition – A degree in investment banking or in a related field especially from a reputed university or institute is like a brand of recognition for the employers to select candidates for the job. It is well known that big companies recruit the best candidates from the university itself through yearly placement rounds. An appropriate degree can increase a candidate’s credibility while applying for entry-level jobs or internships in the investment banking industry.

Skill-based Specialized Knowledge – An investment banking degree will cover a vast curriculum that includes fields such as finance, economics, business, and accounting. The degree course will first give a basic understanding to all these areas and this is critical for success in the dynamic and complex sector of investment banking. The students are exposed to training programs that often help develop essential skills needed in investment banking, such as valuation techniques, financial modeling, risk management, deal structuring, and so on. These skills are extremely valued in the industry and can improve your proficiency to contribute effectively to investment banking roles.

Networking Opportunities – An investment banking degree course can also provide valuable networking opportunities. Most institutes have strong connections with alumni, industry professionals, and guest speakers who can deliver valuable insights, important advice, and possible job opportunities. Networking in the field is often critical to progressing in your career.

While a degree is valuable, it is important to supplement your educational degree with real-world experience, internships, and networking to make the most of your chances of success in the competitive investment banking industry.

 A Must Recommend Read,

Steps to Become an Investment Banker

  • Complete Graduation in Finance and/or Banking Field
  • Join an Internship, preferably in a reputed company
  • Do post-graduation like an MBA in finance or a related field, preferably from a reputed institute
  • Work on Building a strong network
  • Develop Interview skills and practice a lot
  • Apply for a suitable job
  • Acquire experience and expertise through market knowledge in your field
  • Gain promotions and move up the ladder with committed work and keeping yourself up-date with the market and industry happenings

Eligibility Criteria for an Investment Banking Degree

As an eligibility criterion to become an investment banker, most companies demand a degree in finance or accounting background like MBA Finance, CS, CIMA, B.E., CFA, BCA, BBA, M.Com, B.Com, etc. In all likelihood it will be compulsory to have some degree and some sort of experience in the finance industry is also preferable.

Now there are mainly two kinds of degrees to be pursued, one is a Bachelor’s and the second is a Master’s degree, to enrol in any university for a bachelor’s program in Investment Banking, candidates must meet eligibility criteria usually defined by the university. Typically, the eligibility criteria require individuals from any background, who have completed their High School (10+2) from a recognized board or an equivalent diploma recognized by UGC with a certain minimum percentage of marks. For a Master’s degree, typically eligibility criteria is to have either a Bachelor’s Degree or equivalent (10+2+3) or a Diploma (10+2+3) or 10+2+4) from a recognized university (UGC/AICTE/DEC/AIU/State Government) in any discipline with some minimum percentage of marks.

Now let’s take a look at another important aspect of the investment banking field, salary trends.

Salary Outlook for an Investment Banker

The salary of an investment banker in India varies depending on several factors like educational qualifications, years of experience, additional skill set, location, and the company offering the work. Investment bankers working at an entry level who are just starting or have experience of less than one year usually get an average total pay package of ₹1,52,000 per annum as per Payscale. They are usually trainees or apprentices. An investment banker with 1 – 4 years of experience, earns an average total pay package of ₹7, 90,000 per annum, likewise, investment bankers with 5 – 9 years of experience earn an average total pay package of ₹15, 87,000 per annum as per Payscale.

Glassdoor portrays a comparable visual through its vast user base survey. It is estimated that investment bankers earn around ₹14, 43,000 per annum in India, with an average income of about ₹7, 98,000 per annum. This is in essence a scale of estimated salaries from the data gathered from the user base of Glassdoor. It is additionally estimated that an investment banker earns added income of about ₹6, 45,000 per annum which is largely through commission, bonuses, and profit sharing.

Future of Investment Banking in India

The future of the investment banking industry in India is shaping in a favourable direction, and it looks extremely promising. Even when the rupee has suffered a significant drop versus the dollar, it is evident that the system is so robust that it has guaranteed that the market continues to function as usual absorbing all the shocks and that speaks a lot about the current economic situation. Although in the Investment banking sector business model modifications are expected it is anticipated that this will only lead to better consumer returns.

The ever-changing technological sector and the Market forces will determine the future course of the investment banking Industry. AI (Artificial intelligence) the new buzzword, blockchain technology, and automated processes are all instances of fintech revolutions that have improved productivity. Investment banks in the coming time will step forward by offering digitalized and individualized services to organizations while adjusting to the latest regulatory framework and placing greater importance on ESG (Environmental, Social, and Governance) elements and sustainability in decision management. Future trends in investment banking comprise of a more customer-focused approach, which will result in pleased and devoted clients, this will surely increase the bottom line of firms.

Check These Investment Banking Courses Near You:

FAQ’s (Frequently Asked Questions)

Q 1. Is an Investment Banking degree expensive?

The cost of investment banking degree courses in India varies depending on factors like duration, curriculum, location, placement support, etc., and is a bit on the expensive side. A degree course be it graduate level or post-graduate level costs anything between INR 1 lakh to 22 lakhs in India. It may be noted that very few recognized colleges and universities offer a specialized degree in Investment banking as a regular course. Most offer these courses as an online specialized course. These need to be carefully chosen aligning to one’s career objectives. Alternatively, there are many online specialized investment banking certification short-term courses, which are as good, if not better, and can also be explored as an option.

Q 2. In the financial sector are investment banking jobs well paid and highly regarded?

Investment bankers possessing strong market knowledge and analytical skills are in high demand in the industry, in India, and they earn anything between ₹2.0 lakhs to ₹50.0 lakhs annually, with an average pay package of ₹17.0 lakhs. So, yes, investment banking is a well-paid job especially in the finance sector or even if compared with any other sectors. Investment banking jobs are not only high-paying jobs but also well-regarded in the finance industry as well. Investment bankers due to their job profile get to associate with top industry heads and other business leaders from a very early stage of their career, which helps investment bankers to network and shape prospects to move forward in their career at a steady pace.

Q 3. Are investment banking and commercial banking the same?

Commercial banks are traditional banks that engage with individuals and smaller/medium enterprises, for their day-to-day activities. These banks utilize depositors’ money to fund regular loans and mortgages, earning income from interest. investment banks on the other hand cater to large organizations looking into their complex financial transactions like IPOs, M&A, Stocks, Bonds, etc. However, investment banks are more prone to financial risks, due to the complexity of the transactions they undertake and the unpredictable market. Whereas, commercial banks are less likely to experience financial losses since they engage in conventional banking activities and have limited exposure to credit risk.

Conclusion

Presently India is the fifth-largest economy in the whole world and certainly, a reckoning global financial powerhouse. As India arises as a crucial international financial market player, the investment banking industry has achieved significant impetus and stability within the country. The investment banking industry has seen substantial growth, driven by sturdy economic development, rising FDI, and a favourable regulatory environment. This has guided MNCs, large financial organizations, and domestic companies to pursue expertise in the investment banking arena. Accordingly, the investment banking scene in the country has unlocked a wide range of employment opportunities across numerous activities and roles.

So if anyone is planning to take advantage of this uprising opportunities in the investment banking sector, they have to keep in the importance of a proper educational degree. The importance of a proper degree cannot be undermined in any field, let alone investment banking. Any candidate walking into an interview room equipped with a proper degree has a higher chance of getting selected than the one who has no such qualification.

Recruiters not only give importance to educational qualifications but also the institute from which it has been acquired, like a candidate from IIT/IIM will always be given first preference, as they know how prestigious these institutes are. Also, while doing a specialized course, students get to learn dedicated and focused skills, plus they are given exposure to real-life case studies and also get to J network with industry professionals. All these significant factors drive people to study degree courses with a specific focus. This article on the importance of an investment banking degree is an effort to throw a few helpful insights into the sphere of investment banking and act as a guiding light to individuals looking for a suitable path to join the investment banking field. Hopefully, this article on the importance of an investment banking degree has helped you with information about this field.

 

Leave a Reply

Your email address will not be published. Required fields are marked *

*

Call Us