Investment Banking: The Power behind the Scene
Behind the plush image
When you think of an investment bank, the image that probably comes to mind first is a well-dressed banker sitting in a plush office on the top floor of a skyscraper. He or she leisurely sorts through a stack of papers on the desk, or takes an important phone call, and then resumes discussing your company’s capital-raising plans, or answers your questions about investing in certain stocks or government funds.
This image may help explain the continued appeal to new college graduates of working in the investment- banking industry, but there is much more to the story than the well-dressed executives who conduct meetings with clients and take important phone calls. The bankers who meet with clients represent the most visible side of investment banking, but behind them stands a huge investment-banking operations staff responsible for maintaining the bank infrastructure – the framework within which all bank operations take place.
A closer look behind the scenes
Although investment-banking operations personnel may be less visible to the clientele, this does not diminish their important in ensuring that a multitude of transactions proceed smoothly and that client service is maintained at the high level that banks seek to attain. The basic function of the investment banking operations division is to provide administrative support for banking transactions and ensure that money transfers are carried out with the speed, accuracy, and trust bank customers expect.
Human resources management and public relations are also included within the broad category of investment banking operations. Together, a bank’s operations, human resources and public relations employees keep the investment wheels turning.
Investment banks need computer experts as well as bankers
With the rise of computerized banking since the 1980s, implementing and ensuring the smooth operation of an investment bank’s computer systems has become a major part of every bank’s backstage activities. Millions of transactions are recorded, monitored, and processed through the bank’s computers every day.
Given the huge sums of money banks routinely handle each day, and the serious risks that human error and employee fraud entail, a tremendous effort must be invested in operations side of investment banking. In terms of computer data security alone, a tremendous effort is required to satisfy the many duties owed to clients as well as countless government regulations.
Outsourcing creates investment-industry jobs in the Third World
The relentless and intense pressure to reduce the cost of banking operations has encouraged many banks to outsource some of their most basic programming work. China and the Indian subcontinen are two of the most frequent Third World countries on the receiving end of the outsourcing. Although outsourcing basic programming operations creates the potential for major savings, the challenges of remote supervision are far from insignificant.Additionally, the loss of employment opportunities in the country where the investment bank is based is always highly controversial. The flip-side of the controversy, however, is that outsourcing relieves bank employees from the most mundane tasks and makes their work more satisfying.