“Investment Banking.” The very word has the potential to make others aware of how competitive and stressful yet rewarding the field is. With insane deadlines and a lot of stress involved in the area, investment banking is a niche field and is a very tedious and tiresome industry to be in. But it is to be noted that the field of investment banking is very rewarding, with paychecks on the higher side and higher than most of the industries. Investment banking has many functions under it such as equity analysis, derivatives analysis, mergers and acquisitions (M&A), capital markets, trading, debt financing, etc. But it is also to be noted that in 2008, the subprime crisis happened, and it involved many investment banks. This had a substantial adverse impact on the reputation of investment banks across the world, especially in the USA. To reduce the risks which investment banks face, fintech companies have been promoted on a large scale.
We live in a world which has embraced technology to the fullest. Technology and automation have had an immense and significant effect on the financial and banking world. It has become easier for people as well as banks and financial institutions to undertake economic activities and sieve through a whole heap of financial data and information. Fintech companies have emerged as a viable means of conducting complex business operations and transactions, through better financial technology and low-cost banking facilities. Many financial institutions and banks are leveraging and making use of commercial technology, to take advantage of the quick and efficient technology. Hence, it can indeed be said that fintech or financial technology companies are the future of the financial world.
Fintech companies have had a significant impact on the workings and position of investment banks around the world. Traditional investment banking involves going through and surfing through a plethora of financial information and data, which takes up a lot of time and is a very stressful job. But due to the emergence of fintech companies, such processing of financial data has become very simple and cost-effective. With fintech companies undertaking investment banking activities such as market trading, forex trading, etc. investment banks are losing their shine and glamour. Even though some investment banks have adopted financial technology and automation processes, they are incomparable to what fintech companies have been and are doing in today’s business world.
It is also to be noted that many universities and colleges, which provide investment banking education in their MBA and other courses, are introducing fintech courses. These fintech courses will help the future managers, traders and bankers to adapt to the emerging changes in the financial world, to help them leverage and take advantage of upcoming opportunities in the financial world.
What makes fintech so exciting and better than investment banking? Why will fintech make investment banking a thing of the past? This may be since fintech companies have immense potential to disrupt the financial world. Financial technology is not only cost-effective, but it also helps in faster processes for companies and clients and can be a beneficial way of doing banking. With complex processes, fintech companies will help people become smart and more efficient.
Fintech can be a beautiful opportunity for investment banks around the world. But if they lose out on this opportunity, their very existence can be threatened. Only time will tell whether traditional investment banking practices will stay or financial technology will change the financial world!