Investment banking is one of the best career options today. The reason is it is one of most well-paid jobs. While it can be a stressful job and keep one on their toes, work can stretch up to 12-14 hours. Traditionally, investment banking has been a desk job, where analysts and bankers sit and trade stocks. Slowly, this has changed with technological advancement. Investment banking now incorporates more technology than human.
Given the prospects and financial growth opportunities in investment banking. Many from completely different background are taking investment banking certification to pursue career in it.
Spheres of investment banking: trading, M&A, IPOs have been impacted because of technology. Robotic automation, artificial intelligence, and machine learning have made these activities much simpler and effective, than humans could do. Some of the top investment banks such as Goldman Sachs, J P Morgan have bigger technology team than tech giants such as Facebook, Twitter, etc. Today J P Morgan has a team of 50,000 technologists which comprise artificial intelligence, data scientists, machine learning experts and more.
Investment banks now, instead of hiring bankers from other banks, are hiring technologists. J. P Morgan spends around $10.8 Billion a year on this.
Changes in investment banking
Manual trading has now been replaced with algorithmic trading. Trades are executed with computer programs. Algorithmic trades follow a set of instructions defined in a computer program and perform trades accordingly.
Further, high frequency trades (HFT) are now performed with computer programs which are devised by computer programmers. HFTs buy and sell stocks fast.
Other than trading, initial public offering has changed too. It’s now more automated than manual. Goldman Sachs has automated its 127-steps public offering process. Half of which are performed by system called “Deal Link”. It tracks and arranges legal and compliance diligence, fill out forms, generates reports needed for initial public offering.
Not just this, Goldman Sachs has reduced thousands of man work hours and allow them to do better work.
Prevent Activist investor attacks
Next, technology has barred activist investor attacks. Activist investors tend to buy large sum of stocks from publicly listed company. After getting large shares, they try to force stop expansion activities, to get bigger payouts. Typically, it takes a several analysts to figure out activist investors trade with automated programs it is easier. Goldman Sachs has developed a program that can figure out such investor attacks in minutes. The program is called “Jupiter”.
Many investment banks have come up with virtual assistants for their corporate customers, which allows them to perform payroll to billion-dollar M&As.
Investment banking has changed in several ways and traditional way to get into it, is no more applicable. These banks are looking more for computer science graduates than economics and commerce graduate. Taking investment banking certification is also a good way to get into investment banking.
All in all, investment banking isn’t what it used to be. It has changed significantly in the last few years.