When you apply as an investment banker, one of the most common questions is, “why investment banking?” So, how are you supposed to answer the question, “why investment banking?”
A good example of responding to this interview question is saying you want exposure to financial modeling and valuation. You should also say that you understand investment banking entails long working hours and that it is a great opportunity to learn about high-profile transactions.
Your interest in investment banking will give you an opportunity and exposure to financial modeling. Investment bankers have three main functions: investigation, analysis and research, and underwriting and distribution. You can get a career in investment banking if you have the skills to perform these functions.
Read on to learn more about responding to the interview question “why investment banking?” and what it takes to become an investment banker.
Why Investment Banking?
To answer the interview question “why investment banking?”, assure them that you clearly understand the duties and responsibilities of an investment banker. Tell them that you’re interested in the job despite the long working hours.
All investment banks want to hire analysts or associates who are smart. They want to hire diligent and persevering people. They want those who can handle the long working hours and, most importantly, those who don’t easily quit.
To give you an idea, here’s one example of how to answer the question, “Why investment banking?”:
“I’m interested in working in investment banking because it’s an efficient way to learn financial modeling and valuation. It’s also an effective way to understand how large corporate transactions work. I understand that this job entails very long working hours and that it follows a strict hierarchy.”
But, for me, it’s the best opportunity to gain valuable skills. At the same time, at this early stage of my career, it’s a great opportunity to learn about high profile transactions.”
So, what are the strong points from the above-mentioned answer? They are as follows:
- Being aware of the required skills for this job
- Letting them know that you’re aware of the hierarchy
- Knowing about the long working hours
- Showing your interest in exposure to high profile transactions
To Gain Experience with Financial Modeling Is a Primary Reason for an Investment Banking Job
To reiterate, your exposure to financial modeling should be one of your main reasons why you choose investment banking. If you become an analyst or an associate of an investment bank, you would be able to create different types of financial models for high-end transactions. This opportunity might not come if you opt to apply for other entry-level jobs.
Bankers do indeed have unexciting functions too. Just like any other job position, bankers print documents too. Other times, it seems like they are merely doing typing jobs or using the photocopier the whole day. These may seem very clerical to you. But, more than anything else, investment banking will also allow you to hone your skills in finance.
Reasons Behind Your Interest in Investment Banking
Basically, when an HR asked why you’re interested in investment banking, here are some responses you can choose from:
- Learning about Valuation and Financial Modeling
- Having an Exposure to High Profile Deals
- Interested in an Extreme Challenge and Steep Learning Curve
Let’s briefly discuss each of these points:
1. Learning about Valuation and Financial Modeling
In all honesty, working for an investment bank is a great idea. It offers an opportunity to turn you into an expert in building large, complex financial models. What’s great is that you can do this at the early stage of your career.
It does not necessarily mean that bankers are excellent investors. However, bankers spend most of their work time doing valuation work. It is an excellent opportunity to understand it fully and, more than anything else, to start your career.
2. Having an Exposure to High Profile Deals
In most cases, whatever bankers work on remains a top-secret until they are ready to announce it to the public. When this happens, the announcements are normally published on the front page of the newspaper’s business section.
You can mention this during your interview. It will give your interviewer the impression that you have high regard for the company and the industry as a whole.
3. Interested in an Extreme Challenge and Steep Learning Curve
Mention that you know about each investment bank employee’s extremely long working hours in the office. Emphasize that this does not discourage you from applying to the company.
If you have extracurricular activities such as participating in sports tournaments or singing contests, mention that too. Tell them about the long working hours you needed to put into it to master your craft. This will give your interviewer the impression of how disciplined you are.
What Not to Say In Response to “Why Investment Banking?”
The following are most likely your reasons too for applying in an investment bank:
- Doing it for the sake of money
- Using it as your stepping stone to something else
However, avoid saying these negative reasons. Otherwise, you might end up not getting the job:
1. Doing It for the Sake of Money
We all work to earn a living, and that’s already a given. But to tell your interviewer that you need a job all because of money, that is definitely not a great move.
Wanting to work in investment banking just for the sake of money is a negative reason. It will give your interviewer the impression that you lack the commitment to your job. You will give the impression that you will show no compassion for your work. Basically, you are giving the impression that you want a monthly salary and other employee benefits.
Using It as Your Stepping Stone to Something Else
Don’t tell your interviewer, “I am more interested in hedge funds or private equity, but it’s easier to apply in investment banking. So, I’ll probably stay here for a year or two then move to hedge funds or private equity.”
It’s good that you have thought about the career path that you want. But a company that is hiring an investment banker means that they need an investment banker who can stay with them for a long time. They need someone who will grow with the company. More than anything else, they want someone who can contribute to the long-term growth of the company.
If you tell your interviewer that this is just a stepping stone, you give the impression that your plan to work with them is short-term only.
How to Get an Investment Banking Job?
Here is an effective approach that will help you land an investment banking job:
- Use Your Network and Make an Impressive Resume
- Kno How the Interview Process Works
- Be Well-prepared in Answering Interview Questions
- Be Determined to Master Your Technical Skills
Let’s discuss each one of these points.
1. Use Your Network and Make an Impressive Resume
If you want to ace your interview, your network plays a big role in it. There are schools where investment banks prefer to get applicants. But if you’re not part of any of those schools, there are approaches you can take to help you get noticed.
The first approach is to talk to your career center. Ask them to introduce you to any alumni who currently work at investment banks. You may ask to be introduced to several people working for different investment banks. Most importantly, make sure that they will introduce you to someone working for the company you intend to apply to.
Using LinkedIn is the second approach. You can find connections there that can eventually connect you to investment bankers. There are LinkedIn groups you can participate in and where you can conveniently expand your network.
However, when using LinkedIn, don’t impression that you’re there simply because you want to land an investment banking job. The main reason you’re joining groups should be because you’re interested to learn more about investment banking. Be active in LinkedIn groups of investment bankers.
Thirdly, participate in a Chartered Financial Analyst (CFA) society in your area. Mingle with local professionals. For sure, there will be an introduction to several investment bankers during these meetings.
Lastly, try attending the National Investment Banking Competition (NIBC). It is a live investment banking case competition that many schools worldwide participate in. You will undoubtedly get to know several investment bankers at this event.
Also, make sure that you provide them with an impressive resume. This is why it is always a great idea to join societies and associations. You can indicate all of them in your resume and impression that you have a wide network.
When asked “why investment banking,” it helps to reiterate what is in your resume. This will build your credibility and help you get closer to landing the investment banking job.
2. Know How the Interview Process Works
There’s a highly structured interview process in investment banking. Their initial step is to screen resumes. Then, they conduct an initial interview. Once you pass this, you will undergo a series of interviews. Sometimes, it is even a panel interview. If you pass all these, you will then get a job offer.
For the initial interview, the questions will mostly be behavioral, technical, and problem-solving questions. There are instances where interviewers prefer to focus on the technical ones. If you don’t pass this initial interview, you won’t proceed with the rest of the interview process.
The next process consists of a series of interviews. A junior interviewer will most likely ask you technical questions. At the same time, a senior interviewer will most likely ask you behavioral and problem-solving questions.
3. Be Well-prepared in Answering Interview Questions
Again, the questions will most likely focus on technical, behavioral, and problem-solving questions. Also, always remember that you will be asked why you choose to work in investment banking.
This is another reason why you should join societies and get to know as many investment bankers as you can. You can definitely get tips from them. It is indeed one way of preparing for your job interview.
4. Master Your Technical Skills
If you intend to succeed as an investment banker, learn how you can improve your skills. The main skills you need to hone are financial modeling, valuation, MS Excel, and accounting.
You can enroll in short courses to hone your skills, and there are also extensive courses that you can take. Whichever you choose, the important thing is never to stop learning. It’s not all about having an impressive resume. More than anything else, it’s all about improving yourself as an investment banker.
Conclusion – “Why Investment Banking” Interview Question
If you’re interested in becoming an investment banker, it’s most probably because you want the experience and the opportunity to be exposed to financial modeling. Investment bankers have three main functions: investigation, analysis and research, and underwriting and distribution. You can get a career in investment banking if you have the skills to perform these functions.
So, when you are asked why you want to work in the investment banking industry, tell the interviewer about your interest in learning more about valuation and financial modeling. Tell them your interest in learning more about high-profile deals. Emphasize your determination to face extreme work challenges.
More than anything else, if you want to land a job in investment banking, be well-prepared even before you are scheduled for an interview.