How Investment Banking Companies Serve The Market

Investment banking companies are organizations which either manage funds for investors, or which issue stocks into the market to raise money for corporations or government entities. These banks never take deposits or offer savings accounts in the way that mainstream banks do, and they rarely deal with members of the general public unless they are wealthy enough to own individual investment accounts. The function these banks play in the commercial sector is an essential one, as the public corporations need this service to be able to raise capital and function as a business.


The investment banking firms are far less known to the average person in the street because they make no attempt to market themselves in the public media. There is no reason why they should, as there target market and source of business is a completely different one. They are, however, well known throughout the finance industry and amongst those in government, who will often use the same bank multiple times in coordinating stock issues. Most of these banking firms are long established and have a proven history of success, making this an extremely difficult market for a new business to break into.

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If you want to learn about investment banking and discover how it really operates, the first step will be understanding the division which operates in the major banking firms. There is often a side which will deal with placing stock issues into the market, and another side which will handle investment management for individuals and large corporations. These two sides need to be kept apart by regulation in order to allow the system to work, and this is accomplished through tight regulation which is rigorously enforced. There are systems in place to monitor the movement of funds throughout the entire bank, so any irregularities would be noticed.

Not all investment banking companies are active in both sectors, but many are. They will have completely separate arms which handle the buying and selling side of the operation, and no-one will ever get to know what is happening in the opposite arm. The selling side of the business is the one which issues stock into the market for large corporations, and this is the essential feature of an investment bank. The fund management side is known as the buying side, and can help to make more consistent profits for the bank in any market conditions. This is because trading commissions are payable no matter what happens to the investment.

There are several different ways to break into investment banking and to find a position with a banking firm. In every case, you will need to have gone through the college system. If you are able to gain a college degree, you will be considered for entry into a banking firm as an analyst. This may sound like an advanced title but it is in fact the lowest position within the industry. Few people stay in that role for more than three or four years before moving to another part of the business. This will usually be a section which deals with the investment of client funds.

Many investment banking companies are constantly looking to appoint their best people as associates, which have a higher level of responsibility including the management of analysts. They will often recruit directly from within major MBA programs, so qualifying for one of these programs will be a sensible move if you can achieve it. There are also rare occasions when an analyst will be promoted from within the pool, and this is one other way in which promotion is possible. The price an associate will pay for their more lofty position is that they will find it very difficult to move to another sector in the future.

In the past, there was little or no option other than physical attendance at a college campus. This is still the best way to give yourself a chance of breaking in to investment banking, but it not the only way. If you are of standard college age, and are able to devote several years of your time to residential study, trying to gain a place on an MBA program will give you the best possible chance of succeeding. For those not in that position, there are other alternatives.

You can win a place with investment banking companies by studying online through a home study program, and this makes the career an achievable goal even to those who have existing commitments which they need to maintain. The online study courses will contain exactly the same material, and as the courses are theory based they are ideally suited to online learning. If you are the right type of person to be able to motivate yourself through years of study in this type of program, you are probably a good fit for investment banking companies.




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