Trends To Watch Out For In Investment Banking

by Sandesh K.

The investment banking sector has seen a tumultuous ride over the past decade or so, from holding the position of the world’s wealthiest icons to even bankruptcy during a recession. The combination of high capital expenses and reduced interest rates saw many of these stalwarts crumble, with the rest of the industry realizing it was time to make some changes. Coming to the realization that a volatile economy could greatly hamper a business, players in the industry along with governing bodies are on track to make certain changes moving forward.

Further, with rapid advances in technology that are spearheading changes in every sector along with an increase in competition at a global level, investment banking advisory firms are revamping their outlook towards customers. With bigger firms cognizant of their losses and startups beginning to dominate the sector, the trends in investment banking are set to shift from ‘bankers’ to ‘banking’.

Regulatory Framework:

Regulations have been the buzzword in the investment banking sector in recent years. With new regulations being brought in and some of the previous ones being scaled. Yet, the changing aspects such as AI, machine learning and technological automation are likely to bring in some more changes moving forward. 

A core need that encouraged regulatory changes was to force transparency of banking operations. Several past experiences have led to a framework that requires bankers to be transparent in their operations and ensure practical supervision. In India, the impact of regulatory changes on the economy is extremely volatile. 

However, even though the regulatory changes are the hot topic right now, they are unlikely to be permanent. As the situation stabilizes, the regulatory authorities are likely to scale some of these back while retaining the prudent choices such as customer service and transparency of operations. 


Technological advances have transformed every industry, and investment banking is no different. Automation, AI, big data and machine learning are changing how banks analyze and assess new information. 

With a growing shift towards enhanced customer satisfaction, technology is being accepted all over as a means to reach out and connect with customers. In addition, advanced analytics and other data help sales and marketing teams offer customized solutions for a better experience.    

It’s estimated that banking will invest $219 billion in information technology this year, which is a $20 billion increase from 2017.

Another change brought in by technology is that of e-trading. Along with improved measures to detect fraud and protect customers, the rise in cryptocurrency has also led to investment banks upgrading their trading platforms. Cryptocurrency such as Bitcoin is pushing for secure digitized financial transactions. However, this new form of trading requires its set of stringent regulations to overcome any vulnerabilities and is yet to be perfected.

Blockchain is another technology boon that helps reduce risk, eliminate vulnerabilities, ensure transparency in operations, and reduce human dependency thus creating a secure network. 

Workforce Changes:

For the longest time, investment banks have been run with a standard, almost outdated mind-set. With the millennials taking over the workforce and heading managerial positions in the coming years, the operational conduct of investment banks is likely to be challenged. 

A stark difference will be in the adaptation of technology. While the earlier lot had to learn every new process along the way, millennials are born into the digital world. Their tech-savvy nature and out-of-the-box thinking could also be a boon in encouraging investments and enhancing confidence in new investors. Further, along with profit margins, investors are also likely to focus on macro-economic factors that impact the economy as a whole.

Organizations that resisted upgrading their technology to automated systems are likely to witness a drastic change with millennials welcoming automation and shifting employment mainly to managerial levels. In addition, the growing emphasis on customer service is likely to demand human positions. While chatbots and automated systems are leading the way in customer interaction, it is unlikely that it will phase out human interaction altogether.

Moving forward, flexibility will be a dominant requirement in investment banking to succeed. A lot of the old methods will be phased out, paving the way for new strategies. With changing dynamics within the industry and amidst the customers, the next few years will be instrumental in showcasing which firms have the ability to adapt to changing ecosystems and which do not. Fintech, along with an ever-evolving environment, will require organizations to not just put out fires as they arise but strategically plan for any potential disruptor ahead of time. 

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About Sandesh K. Junior   

3 connections, 0 recommendations, 12 honor points.
Joined APSense since, February 14th, 2018, From Mumbai, India.

Created on Feb 10th 2020 01:55. Viewed 258 times.


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