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Investment Banking vs Financial Services – What is The Difference?

Investment Banks act as advisors or consultants to businesses and governments on how to meet their financial challenges. They also help their clients with financing, research, wealth management, asset management, trading and sales, Initial Public Offerings  (IPOs), mergers and acquisitions, hedging, and more whereas Financial Services are a broad range of financial industries such as banking, investing, and insurance. It is a process to acquire financial goods or it involves a process or transaction to obtain the financial goods. We are going to look at Investment Banking vs. Financial Services in detail. 

INVESTMENT BANKING VS FINANCIAL SERVICES-compressed

Investment Banking vs Financial Services are related fields in the same financial industry but they serve different functions and have different activities. Below are a few key differences between Investment Banking and Financial Services:

 Services: Investment Banking Vs Financial Services

Investment Banking invests their customers’ money on their behalf for deals like mergers and acquisitions, underwriting, advisory services and various types of loans and other financial transactions whereas Financial Services offers a broader range of activities that includes banking services, commercial services, insurance, wealth management and many other financial services.

Clientele: Investment Banking Vs Financial Services

Investment banking serves large corporations, high net-worth individuals, and investors whereas Financial Services serves a broader client base such as individual customers, small and medium enterprises (SMEs), as well as large organizations.

Risk and Reward: Investment Banking Vs Financial Services

In Investment Banking higher returns come with higher risk, especially in areas like mergers and acquisitions, underwriting and advisory. The more successful transactions, the more growth of the financial firm whereas Financial Services are more into the traditional way of banking where there is less risk with medium profit. It is a very stable set of services that includes banking, insurance and wealth management.

Regulations: Investment Banking Vs Financial Services

Investment Banking deals with specific regulations like trading, mergers and acquisitions whereas Financial Services deals with a broad range of regulations that vary by sector.

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Investment Banking Vs Financial Services – Definition And Responsibilities

Who is an Investment Banker?

An Investment Banker is an individual appointed by as an advisor to advise high-net-worth clients on their capital investments. The major responsibility of an Investment Banker is to manage portfolios of individuals or organizations to get profitable returns. The history of Investment Banks in India traces when European banks dominated investments and merchant banking in India. Indian Banks came into existence to stop the overpowering of foreign banks in the Indian market.

Some of the Key Responsibilities of Investment Bankers Are:

Deal Structuring: It is a process to organise and design business transactions with a minimal amount of risk involved. It involves the terms and conditions required for completing any deal mutually. Deal structuring plays a major role in mergers and acquisitions, partnerships and other types of transactions.

Client Relationship Management: Maintaining a strong relationship with the clients is one of the major roles of an Investment Banker. Understanding and providing services as per their client’s needs will help them excel in their job which will also help their company to grow along with giving profitable returns to their clients.

Due Diligence: Due diligence and its categories are:

  • Legal due diligence
  • Financial due diligence
  • Commercial due diligence

Regulatory Compliance: Investment must ensure that all the transactions have complied with relevant financial regulations and legal requirements such as securities and disclosure law.

Financial Modeling: It is a process of creating a summary of a company’s expenses and earnings that is their profit and loss account in the form of a spreadsheet to calculate future decisions.

Major components of Financial Modelling are:

  • Income Statement
  • Balance Sheet
  • Cash Flow Statement
  • Debt Schedule

Presentations And Pitching: Preparing and delivering presentations, pitching the services, and delivering them to the clients is a prime role of an Investment Banker.

Work Pressure: As an Investment Banker, a professional should be able to survive in a high-pressure job with long working hours.

Mergers and Acquisitions: Providing advice to clients on mergers and acquisitions, assessing the value of the transactions, and designing and structuring the deal for financial growth.

Underwriting: Assisting in issuing various loans with all the necessary documents required is taken care of by the Investment Banker.

Risk Management: To minimise the risk through managing fluctuations in interest rates, currency exchange rates, and other commodity rates.

Research: Analysing the company’s growth, and analysing market trends and economic indicators to assist clients in making informed decisions.

The above key responsibilities will help the readers to find a slight difference between Investment Banking and Financial Services.

List of some Investment Banks:

  • State Bank Of India Capital Markets
  • ICICI Securities
  • HDFC Bank Ltd
  • Axis Bank
  • Goldman Sachs
  • JP Morgan
  • IDBI Capital
  • Barclays bank
  • Central Bank Of India

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What are Financial Services?

Financial Services is a broad term used to describe the various offerings within the finance industry that involve how to manage money, invest wisely, protect against risk, and plan for their plans. These services are provided by institutes, businesses, and professionals to help individuals, corporations and governments with their financial transactions, and risk management. It plays an essential role in the economic function and overall financial well-being of individuals and organizations. This sector is continuously evolving with technological advancements required for the financial market across the globe. They are services related to money.

Why Financial Services are Important?

Financial Services are important and play a major role in the financial market as they enable people to make big investments and save for their future. Investments are done via some representatives from the banks for which a commission or fee is charged, which is a common method of earning income for the financial service firms. It is one of the highest growing sectors with ample job opportunities.

Some of the top Financial Services companies are:

  • Mahindra and Mahindra Financial Services Ltd.
  • HDB Finance Services
  • Bajaj Finance Services Ltd
  • IDFC First Bank Ltd
  • Muthoot Finance Ltd
  • Tata Capital Financial Services Ltd
  • Aditya Birla Finance Ltd
  • Cholamandalam Investments and Finance Services Ltd.
  • L&T Finance Holdings Ltd
  • Edelweiss Financial Services Limited

Below is the List of Some Types of Financial Services:

  • Professional Advisory
  • Banking
  • Wealth Management
  • Mutual Funds
  • Stocks Market
  • Insurance
  • Treasury or Debt Instruments
  • Tax or Audit Consulting

Some of the key points of Financial Services are:

Banking: Banking Services like savings and current accounts, various types of loans, and financial products including electronic funds transfers and payment systems. Remittance, consultancy, or advisory services are also important parts of banking services.

Insurance: The main purpose of various types of insurance such as life insurance, health insurance, general insurance, property insurance, etc. is coverage against any risk. The process involves customers paying the premium amount to the insurance company and receiving the agreed amount in case any event occurs.

Investment Services: These services involve providing advisory services to its clients for investing in stocks, bonds, mutual funds, and other securities. These firms are called Investment banks, brokerage firms and financial advisors.

Asset Management: Asset management can be explained as managing day to day running of a wealth portfolio. An investment manager also known as a relationship manager or wealth manager is assigned to advise some sets of customers and help them to solve their financial challenges resulting in some profitable investments. This includes assessing risks and finding opportunities. More simply it can be explained as managing clients and growing that money at the same time, mitigating the risk.

Real Estate Services: Suggesting and assisting customers on mortgages, real estate transactions and property management. These services are assisted by professionals assigned by the financial companies.

Credit and Lending: Credit and Lending facilities include services like personal loans, credit cards, mortgages and many other loans.

Financial Planning: Retirement planning, income budgeting, tax strategies and investment advice are essential parts of financial planning services. These services are provided by qualified professionals hired by financial firms.

Wealth Management: Managing and growing the wealth of high-net value customers by offering them financial advice, and investment strategies.

Financial Education: Giving proper financial education to the customers to help them understand the financial market through conducting webinars, seminars, and workshops.

Technology and Innovations: New technology and innovations help in efficient financial transactions. Developing and continuously improving mobile banking and online banking services through new technologies and innovations.

Corporate Finance: Through corporate finance, businesses raise capital through Initial Public Offerings (IPOs). We are also advising businesses on mergers and acquisitions, underwriting and various financial services.

Government Relations and Compliance: Compliance can be maintained by maintaining proper government relations and proper reporting of financial activities should be reported to the stakeholders.

Risk Management: Risk management can be assessed to manage various financial risks, credit risks, market risks, and operational risks. Insurance products are helpful to mitigate risks related to health, life, property and more.

Check These Investment Banking Courses in India Near you:

Who can be a Financial Professional?

There is a difference between the Investment Banking and Financial Services professional categories, the latter has a broader option. As a financial professional an individual must have an experience in various aspects of finance. These individuals work in the fields such as investment, finance, and accounting. Some of the common types of financial professionals are:

Accountants: An accountant’s role is to keep a proper record of the accounting, and auditing and to prepare financial strategies for businesses and individuals.

Stockbrokers: They are financial professionals who buy and sell stocks and bonds in the stock market on behalf of their clients whether individuals or organizations. They also help their customers with investment advice.

Insurance Agents: Insurance products are a little complicated to understand without having theatrical knowledge, this is where an Insurance agent plays a crucial role in helping its customers by guiding them about the right insurance product as per their needs.

Financial Advisors: To become a financial advisor an individual must hold a certification such as Certified Financial Planner (CFP), Chartered Financial Analyst (CFA)

Investment Bankers: They are professionals who are responsible for issuing stocks and bonds, mergers and acquisitions, and other financial transactions.

Real Estate Professionals: These professionals are responsible for managing the buying and selling of real estate property and also managing them. They are called real estate agents or brokers.

Loan Officers: Loan officers are part of banking and financial services and are responsible for granting and approving loans to the right candidates through navigating the loan application process.

Below is the List of Some Top Institutes for Providing Courses on both Investment Banking and Financial Services:

1. IIM SKILLS-

IIM SKILLS is a well-known online institute that offers various courses and the Investment Banking Course is one of them. You can visit the official site of IIM SKILLS for any information about their courses. As investment banking jobs are on the rise, their courses are designed as per market demands, and in this course students are taught every detail of Investment Banking and when and how to use them in day-to-day life when working as an Investment Banker in any organization.

What Will You Get in the Investment Banking Course at IIM SKILLS:

  • Online Investment Banking course
  • 70+ Hours of lectures including training and doubt-solving sessions
  • Practical Assignments and Case Studies for real-time experience
  • Guaranteed Internship for 1 month with 100% job support.
  • Get assistance with LinkedIn profile building.
  • Recognized Investment Banking Certification.

The Following Modules Covered Here Are: 

MS PowerPoint:

  • Introduction and understanding of MS PowerPoint.
  • Keyboard shortcuts and their importance
  • Creating, managing and designing the slides
  • Adding transitions and animations
  • Creating the slide master
  • Inserting pictures, and links and editing them
  • Working on illustrations and shapes
  • Building different kinds of graphs and charts

MS Excel:

  • Introduction to MS Excel and Ribbon
  • Uses of many different functions
  • Rules of conditional formatting
  • Font and Number Formatting
  • Data validation, sorting and filters using Excel functions as well as formulas
  • Table functions and dynamic arrays
  • Data presentation.
  • Introduction to Macros

Fundamentals of Financial System and Market:

  • Basics of the financial system
  • Money market
  • Market participants and Regulators
  • Stock Exchange and Financial Centres
  • Meaning of depository receipts
  • Characteristics, Securitisation and types of bond
  • Yield to maturity
  • Forex and its features
  • Quotes and Trades

Derivatives Market:

  • Introduction to Derivatives Forwards, Futures
  • Discussion of Call and Put options
  • Different Pricing in the Derivative Market
  • Meaning of Hedging and Speculation
  • Overview of Credit default swaps

Technicals of Investment Banking:

  • Overview of Investment Banking
  • Role of Investment banker
  • Vertical and Horizontal Mergers
  • A sell-side deal lifecycle
  • Concept of due diligence
  • Overview of Greenshoe Option
  • Understanding of Corporate Restructuring and Turnaround

Different Marketing Collaterals:

  • Buyers list / Investors list
  • Non-Disclosure Agreement (NDA)
  • Pitchbook / Pitch deck
  • Teaser
  • Confidential Information Memorandum (CIM)
  • Financial Models

Technicals of Financial Modelling:

  • Introduction to the financial model
  • Preparation of different schedules, including equity, depreciation, debt, working capital and fixed assets.
  • Addition of cover page

Business Valuation:

  • Difference between GPC and GTM
  • Criteria to screen peers
  • Valuation multiples to be used
  • Ideal time to focus on, including Last Twelve Months (LTM), Next Twelve Months(NTM),
  • historical and projected years.
  • The related concept of NOPAT, changes in working capital, Capex adjustments
  • Concepts of controlling premium
  • NAV approach for valuation
  • Relevance of the approach
  • Presentation of valuation output
  • Concepts of pre-money and post-money valuation.
  • Different ways of calculating Beta
Module 1MS PowerPointModule 5Technicals of Investment Banking
Module 2MS ExcelModule 6Different Marketing Collaterals
Module 3Financial System and MarketModule 7Technicals of Financial Modeling
Module 4Derivatives MarketModule 8Business Valuation

Other Professional Courses from IIM SKILLS

Course Details:

Course Details: 3 months + 1 month Internship

Course Fees: INR 39900 + GST

Contact No. +91 9580740740

Email: [email protected]

2. Corporate Finance Education (CFI)-

Corporate Finance Education is an online institute that helps its students to have a basic understanding of finance for any successful business growth. Well-designed courses with proper training in Investment Banking are given to the learners who opt for this course. The Corporate Finance Education (CFI)  training programs are designed in such a way that will also help you gain all the knowledge about Investment Banking vs Financial Services.

Financial Modelling Using MS Excel:

  • Financial Modelling and Valuation Analysis Program
  • Classroom/ Live Online Class/ Self-paced
  • CV Preparation and Mock Interviews
  • 100% placement assistance
  • Weekend and Weekday batches

Financial Modelling Using MS Excel Curriculum Highlights:

  • MS Excel Training- Basic to Advance
  • MS PowerPoint Skills
  • Financial Statement Analysis
  • Business and Financial modelling
  • DCV Valuation
  • Comparable Company Analysis
  • Comparable Transaction Analysis
  • Introduction to Project Finance
  • Company Profile and Pitchbook
  • Capstone Project
  • Soft skills Training and Resume-building

 Certificate in Investment Banking:

  • Financial Modelling And Valuation
  • Merger & Acquisition, Pitchbook, Fund Raising
  • Company Profiles and Industry Analysis
  • Equity Research Report Writing
  • Interview Soft Skills and CV Building
  • Weekend and Weekday Batches

Certificate in Investment Banking Curriculum Highlights:

  • MS Excel Training- Basic to Advance
  • MS PowerPoint Skills
  • Financial Statement Analysis
  • Business and Financial Modelling
  • DCV Valuation
  • Comparable Company Analysis
  • Comparable Transaction Analysis
  • Introduction to Project Finance
  • Company Profile and Pitchbook
  • Industry Analysis, Benchmarking and Charts
  • M&A Merger Modelling
  • Introduction to Credit Analysis
  • Introduction to Stock Market Investments
  • LBO Modelling (Optional)
  • Soft Skills and CV building

The Investment Banking Certificate from CFI Will Help You to Perform the role Successfully:

  • Investment Banking Research
  • Equity Analysis Research
  • Financial Advisory
  • Credit Analysis
  • Project Finance Modelling
  • Financial Analysis

Contact Details: +91 93542 66554

 3. Indian Institute of Management Indore-

IIM Indore is an autonomous business school that ranks 8th in the country for its world-class training courses designed to give placement opportunities to its students by helping them enhance their skills. Their courses are designed in such a way that you understand the basic difference between Investment Banking and Financial Services of the financial market, which will help you understand your job better as an Investment Banker in any firm.

Highlights Of The Course:

  • Alumni executive education
  • Campus immersion module

Content Of the Course:

  • Financial Reporting, Analysis and Valuation
  • Financial Management
  • Investment and Portfolio Management
  • Investment Banking- 1 and 2
  • Mergers & Acquisitions
  • Options, Futures and Derivatives
  • Economic Environment
  • Spreadsheet Modelling for Finance
  • Industry lecture

Courses and Training Offered at IIM Indore are:

  • Accounting Fundamentals
  • Financial Statement Analysis
  • Financial Modelling
  • Corporate Valuation
  • Excel skills
  • Corporate finance
  • Mergers & Acquisition

Eligibility For The Course Completion:

Diploma or Bachelor’s degree or equivalent or 2 years Master’s degree or equivalent from a recognized university with minimum 50% marks of all the years.

Course Duration: 12 Months

Course Fees: INR 4,00,000

4. The Wall Street School-

The Wall Street School is a renowned Institute for Investment Banking. The syllabus is designed to help its students compete with the market standards with a deep understanding of Investment Banking and Financial Services. It was founded in 2009 to provide world-class courses with the rise in Investment banking demand.

Highlights of the Course are:  

  • Hands-on case studies and projects for training
  • Pay only 40% of the fees on the enrolment and 60% after the successful placement.
  • Batches are available as per individual convenience- weekday and weekend batch

The Modules Covered in this Course are: 

Module-1 Essential to Intermediate Excel: 

  • Using the mouse in Excel
  • Sorting data to use advanced filters
  • Cell freeze, row freeze and column freeze
  • Using conditional formatting
  • Linkages used for financial modelling
  • Match function
  • CAGR Calculation
  • Transpose function
  • Usage of the IF function
  • Table function
  • Pivot function
  • IRR Calculation
  • Cell referencing
  • Interest function as EMI calculator
  • Sum if, Count if, Sumifs
  • Sum product functions
  • Multiple usage of Vlook functions.

Module-3 Basic Finance Concepts: 

  • Ratio Analysis of Financial Statements
  • 3step and 5step Dupont Analysis

Module-4  Feasibility Study/Business Modelling:

  • Building dynamic business models from scratch

 Module-5

Here you learn how to build a detailed trading comp right from selecting peers to analysing the final output.

Investment Banking Courses in Abroad Near You That You Must Not Miss:

The Following Highlights of These Points Are:

  • Possible reasons for why different companies in the same sector are trading at different multiples and how to analyse those differences before jumping to the conclusions that a particular stock is undervalued or overvalued
  • Role of multiples in IPO valuation
  • Running regression analysis on multiple
  • How to select peers in case other listed companies are unavailable in the same space.

Module-6 Discounted Cash Flow Valuation:

  • Projection of free cash
  • How to calculate WACC
  • Different ways of calculating beta

Module-7 Merger Model: 

  • Everything about the M&A Process
  • Why we need to learn PowerPoint
  • Basics of PowerPoint
  • Learning Letter of Interest
  • Learning Letter of Intent full
  • Learning Merger of Model Basics
  • Merger Model Files
  • M&A Notes

Module-8 Leveraged Buyout:

  • LBO Model (Valuation)
  • LBO-Transaction assumption
  • LBO-Debt assumptions
  • LBO- Goodwill calculation
  • LBO- Closing Balance Sheet
  • LBO- Income Statement
  • LBO- Balance Sheet
  • LBO- CFS
  • LBO- Key metrics
  • LBO Files

Course Duration:

  • 6 Weeks / 180+ Hours /Mon-Fri/ Rs 45000+GST
  • 2.5 Month weekend/ 120 Hours/ Sat-Sun/ Rs 42000+GST

FAQs

1.   What is the difference between Investment Banking and Financial Services?

Investment Banking and Financial Services are somewhere related but also have some distinct features as well. Some of the key differences include the scope of services, they have different client bases, different functions and rules and regulations of the financial market.

2.   Are the skill set required for Investment Banking vs Financial Services similar?

The skill set required for Investment Banking focuses more on financial modelling, deal structuring, valuation, and strong analytical skills whereas Financial Services have a broader outlook and focus more on specific roles such as customer service, risk management, asset management and more.

3.   What is the career path in Investment Banking and Financial Services?

In the Investment Banking and Financial Services career path, an individual initially starts as an analyst progressing to the associate, vice president and director then Managing Director whereas in Financial Services it depends on the type of organization, such as a teller in retail banking will be promoted and will be known as a loan officer in corporate banking.

4.   What are the educational qualifications required for Investment Banking vs Financial Services?

Both fields Investment Banking and Financial Services requires typically a bachelor’s degree in finance, business or economics and a Master’s in Business Administration. The educational requirements vary with the specific role and might require some additional certificate.

Conclusions:

Investment Banking vs Financial Services are more or less the same field where financial services have a broader and wider aspect of the financial market. Investment Banking is a part of Financial Services. Investment Banking professionals mostly work in a team, collaborating with

financial experts to provide a fruitful solution to their clients. They should have a deep understanding of the financial market whereas Financial Services individuals may work independently or in a team, totally depending on the nature and requirements of the job. These individuals may be employed by insurance firms, banks, insurance companies or financial institutes. Appropriate credentials and experience are important for professionals to work as Financial Service professionals.

 

Author:
I am skilled at researching any topic requested and values creating unique yet compelling articles for my clients. My passion for writing content and blogs has motivated me to pursue a career in content writing from IIM Skills. Before this, I have 6+ years of experience in the Banking and Media Industry with EiPi Media, Hindustan Times(Shine.com), Royal Bank of Scotland and Citibank.

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