2020 Trends in Investment Banking: It’s Time to Reshape the Hiring Experience 0

2020 Trends in Investment Banking: It’s Time to Reshape the Hiring Experience

As the economy and the investment banking industry continues to be strong, the market will only be more competitive. To secure top talent in this competitive landscape, organisations are reshaping their hiring experience to suit modern candidates so that they can align their existing policies to create a congenial work environment, establish innovative business practices, and attract and retain quality talent.

2020 Trends in Investment Banking: It’s Time to Reshape the Hiring Experience

Access to talented and creative people is to modern business what access to coal and iron ore was to steel-making – Richard Florida

It’s a Friday evening and I am sitting face-to-face with a potential candidate to hire for our organisation. The resume and educational credentials are impressive, and the candidate has experience in closing private equity/venture capital transactions with well-known equity funds. Yet, I am sceptical whether this individual will be the right fit for Unitus Capital, a boutique investment bank for impactful businesses. The candidate seems to be an introvert, lacks soft skills, and ab initio does not show any passion and commitment for the impact sector and could struggle to be part of a highly focussed, passionate, motivated, and committed team like ours.

Incidentally, my team members, who had interviewed the candidate earlier are also not keen, probably for the above reasons. Unanimously, we decide not to pursue this candidate further. And, the time consumed for the entire process? 3 precious months!!! Unless we get the right candidate, we’ll continue the interview process until we’re satisfied that the prospective candidate’s hard skills complement his/her soft skills, passion, and commitment. That, in a nutshell, is how a hiring process takes place in an investment bank like ours.

Investment Banking: Hiring and Selection

The term “investment banking” might conjure up impressions of a high-flying, jet-setting lifestyle, as well as handsome salaries and mouth-watering bonuses. While these may be true for big names like JP Morgan Chase, Goldman Sachs, Barclays, and several others, most investment banks in India, especially the boutique ones, are far removed from such stereotypical representations. So, before we look into the hiring practices in the sector, let me provide a brief introduction to the investment banking sector and its importance to a country’s economy. In essence, an investment bank offers a range of advisory services for facilitating financial transactions of different types. These services include financial advisory, underwriting, raising capital (debt and equity), issuance of bonds, research, and documentation for the same, among others. For a developing economy like India, investment banking provides access to the much-needed capital for infrastructure development, financing new projects, growing and building businesses, funding social enterprises, and so on. Investment banking also acts as a backbone to sectors, such as agriculture, financial inclusion, healthcare, education, water, sanitation, energy, etc., in their quest for capital.

A boutique impact investment bank like ours follows an extensive end-to-end hiring process that can take months to complete. The preference is towards top tier schools and colleges, but candidates are also hired from tier II institutions provided their experience and expertise to match the company’s requirements. For entry-level, banks usually look at candidates with a few years of experience. The reason is that once an experienced candidate is hired, it’s easy for him/her to learn the ropes of investment banking faster than a greenhorn. Additionally, the former doesn’t require training as much as the latter. While banks prefer candidates with a finance and accounting background, they also welcome competent candidates from engineering or management backgrounds. Today, organisations select a candidate on various factors like experience, skill sets, etc. However, soft skills matter just as much or even more than hard skills. Therefore, organisations have started to look extensively into other aspects of hiring, such as cultural fit, passion, commitment, dedication, ability to interact with multicultural teams, and long-term interest in the sector/space they have to work in. According to a survey, the banking and finance industry has an attrition rate of a whopping 18.6%, one of the highest among all industries, whereas investment banking has a much higher attrition rate. In contrast, at Unitus Capital, the attrition rate is less than 5% for the mid- and higher management levels for the past 3 years. Most of the senior management team have been with the organisation for over 7 years! We strongly believe that this has been possible because of the comprehensive efforts that have gone in selecting the right candidate and looking at the overall fit, painstakingly, rather than focusing on qualification and relevant experience.

With women participation rate at 24%, India at present is ranked at an abysmal 120th out of 131 countries surveyed by the World Bank (2018). The global average for women workforce participation stands at 48%, which is twice of India’s rate.

In the US, major investment banks run analyst programs for undergraduate and graduate students, irrespective of whether they have a grounding in finance. Such programs assist students in navigating the intricacies of investment banking and provide necessary tools to build a career. In India, a few investment banking businesses do have an analyst program. Going forward, the analyst program could become much more important for investment banks in India.

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The Millennial Factor in Investment Banking

Much has been said about how millennials are influencing and disrupting just about everything worldwide. What I have observed so far about this demographic cohort is that they are hardworking and efficient as well as more tech-savvy compared with the previous generations. They are willing to put in the extra hours and go out of their way when it comes to completing assignments or closing mandates. They also wish to climb the career ladder faster than the previous generations. And, if they believe that the organisation isn’t rewarding them periodically, they won’t hesitate to switch jobs. So, how does the investment banking sector attract millennials? In fact, they can align their existing policies to create a congenial work environment, establish innovative business practices, offer flexible working hours, offer interesting, innovative, and challenging assignments regularly, facilitate upskilling and cross-skilling, and fast track best performers for promotions coupled with attractive salary and rewards to keep millennials motivated to continue and grow in the organisation.

According to a survey, millennials will represent about 75% of the workforce by 2025 and investment banks should be well-prepared to cater to the needs of such a huge populace in the days to come!

Hiring in Investment Banking: Importance of Technology and Social Media

The rapid growth of various technology-led processes hasn’t left any sector untouched and investment banking is no exception. Despite all the talk, a majority of recruiters in investment banking aren’t using technology in the hiring process. Now, when I talk about “technology”, it not only means artificial intelligence and other data-gathering software but also social media, which can be an effective tool in attracting millennials to investment banking. One can start with employer branding videos that capture the “mood” of an organisation and share the achievements of the organisation through social media to build the brand. Ideally, an interview needs to be conducted in person; however, if a candidate is unavailable for a face-to-face interview, the recruiter should be flexible enough to opt for video or mobile interviews. With greater access to smartphones and the availability of high-quality apps for the same coupled with a lower cost of data transmission, these types of interviews are gaining traction.

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The process of hiring and recruitment is time-consuming. To save on time and resources, investment banks need to invest in software that will track the right candidate from the initial stages itself. Organisations can set up interview schedules, conduct live tests, send online assessments, track applicants at every stage, manage referrals, and so on. If a company has a dedicated portal for job openings and interview processes, it will leave a lasting impression on candidates’ minds about the company. However, speaking from experience, I can vouch that no amount of technology can replace the “human touch” to access and analyze the candidate thoroughly to land a great hire.

2020 Trends in Investment Banking: It’s Time to Reshape the Hiring Experience

Conclusion

The sub-prime crisis of 2008–2009 and the role of well-known investment banking firms in perpetuating it probably maligned the image of investment banking significantly in the eyes of the general public. Investment banking acts as a bridge between the investor who is looking at investing capital and the investee who is in search of capital to
expand his business further. An investment banker’s job is to bring these two entities on the same page and convince them on the advantages of coming together through a suitable transaction structure, duly meeting the requirements of both parties for a long-term, mutually beneficial partnership.

Investment banks need to consider a flat hierarchy structure to shorten the chain of command, increasing communication between employees and management and build teams on the strong pillars of a continuous learning environment. Organisations’ focus should be on understanding the needs of employees and finding ways to up-skill them in different aspects of the business alongside keeping them fully motivated towards the achievement of organisational goals. An investment banker needs to work long hours, prepare compelling pitches, negotiate the terms of the transaction in the best interest of their clients, etc., but at the end of the day, it’s rewarding and satisfying when the transaction is completed successfully. It has been a privilege to work as an investment banker for more than a decade. Not only have I learned a lot, but I enjoyed every bit of it as it gave me an opportunity to work with amazing entrepreneurs who are passionate about making the world a better place coupled with working with highly professional investors who pushed us to become much better bankers. I must admit that it has been a truly enriching and enlightening experience!

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Abhijit Ray has 26 years of experience in Investment banking, Financial Services, SME Funding and Development and Impact Investing. He co-founded Unitus Capital in 2008 and UC Inclusive Pvt. Ltd. in 2016, over the past 11 years, has successfully led and closed multiple equity and debt transactions totalling US$ 2.5 billion. Abhijit is an Economics graduate and a Certified Associate of IIBF, Mumbai. He attended the “Strategic Leadership programme in Microfinance” at Harvard Business School, School of Applied Microfinance (SAM) 2005 in Kenya, and Strategic Planning for MFIs in South Africa.

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