Current Challenging Trends of Investment Banking in India

Investment banking industry demands for upgradation post the global economic crisis. This industry is facing a lot of challenges such as innovative customer-focused portals, rising costs, increasing cyber-threats, that have restricted investment banking companies from successfully recovering and growing.

Let’s know more about investment banking.

Investment banking is part of financial services which advises companies and governments on how to raise money, execute mergers and acquisitions and how to restructure their businesses in order to be most effective and efficient.

There are five main key areas within the investment banking division.

Mergers and Acquisitions (M&A)
Equity Capital Markets (ECM)
Debt Capital Markets (DCM)
Restructuring
Leverage Finance

The M&A business is where bankers advise companies on mergers and acquisitions. A merger is when two companies come together and an acquisition is when a bigger company takes over a smaller company.

Next, we have ECM and DCM, whilst M&A focuses on advising business on mergers and acquisitions, ECM and DCM focus on advising companies, businesses and governments on raising capitals.

ECM focuses on raising money through equity whereas DCM involves raising money through debt.

For example, Facebook wanted to raise funds through equity so an investment banker made is possible for the public to buy shares in Facebook in exchange of money, on the flipside we have got debt capital market, where money is raised through debt, for instance think of a mortgage one takes a loan and the bank makes money from the interest paid.

This is the same in debt capital except that the clients aren’t individuals but massive corporations where the interest payments are in millions.

Then we have leverage finance which is similar to Debt Capital Markets (DCM) but riskier. DCM is more about safe loans, government bonds whereas in leverage finance the potential profit or loss that a trade can make is amplified making it extremely risky.

Lastly, we have restructuring, this is where a banker scrutinizes and analyzes the structure of a business, so they look into the debt-to-equity ratio and find out if the business is structured in the most efficient way in order for that business to run in the best interest of the shareholders. The bankers in the restructuring team looks into these factors and constructs the best structure for that company.

This fairly describes the functioning of an investment banking industry. Now let us look into the prospects of an investment banker.

Investment banking has always been considered a lucrative business which is still a dream for many. An investment banker on the other hand earns a whopping $100,000-$130,000 in the first year that will consist of the base salary as well as bonus payments.

Typically most people who break into the investment banking division or investment banking are those who graduated from top tier universities and are immensely bright students who have undergone extensive internship programs which help them build confidence and get a grip of their job.

You must be wondering if you lost the chance to even consider taking up investment banking as a career option since the pandemic seems never-ending!

Here comes the power of the internet to answer all your queries. With the onset of the pandemic, educational institutes shifted to online mode and started offering investment banking courses online. Not just that, along with online courses for investment banking, many e-learning forums also made investment banking internship possible following the “work from home” concept.

This current trend of taking classes online has made life easier for investment banking training institutes as they can conduct sessions and be more flexible with the timings as everything is operated from home.

People who do not wish to invest years in earning a degree in investment banking can opt for certification courses in investment banking offered by DataTrained.

This is just a 6 months program delivered by experts from the industry and also comes with 100% placement assistance. This can be considered as one of the best investment banking training programs.

Now let us sneak peek into the potential challenges faced by this very industry.

The modern investment banking industry is facing challenges like:

Scarce capital resources which is a result of pandemic induced recession and depression all over the world.
Need for cost reduction is resulting in the prices of goods and services lower down to match the competitive edge in the market, which in turn makes companies shrink their margins.
Retaining talents have become difficult as young enthusiast are lured by the startup culture and wish to work independently.
Cybersecurity has become an important factor. Extensive use of technology and digital platforms makes company data and information vulnerable which need to be protected.


There are many such challenges faced by the investment banking industry but the bottom line is that the industry needs a transformation where the best practices are retained and modern technology is adopted to meet the industry demands.