Corporate finance and investment banking are two of the most promising fields in finance if you are a finance student hoping to make a big splash in the industry. Both fields are quite competitive and offer fantastic career pathways with opportunities for exponential growth.
Broadly, companies choose from two different banking services: corporate banking and investment banking. Both are included in the expansive category of financial services. However, there are some significant variations between the two. For instance, while investment banking is frequently transactional, corporate banking entails a long-term relationship between the financial institution and the client.
Read on to discover the difference between the two types, as well as how each service impacts the financial sector as a whole.
What is Corporate Banking?
Corporate banking provides services to large-scale firms as they focus on offering a range of financial services, including loans, portfolio management, and assistance to MNCs through tax-saving choices.
A corporate banker carefully examines their clients’ portfolios and ensures that financial risks are kept to a minimum. Moreover, commercial banks have many opportunities available to them. Credit Analyst, Loan Officer, Branch Manager, Trust Officer, and Mortgage Banker are just a few available jobs.
Corporate Banking as a career
Within corporate banking, there are dozens of different roles, each with its own requirements for education and experience, job duties, ideal personalities, pay, working conditions, and so forth. However, offering banking services to corporate companies is ultimately what matters.
You are able to choose between the following:
- Loan Officer role: A loan officer makes the determination of a client’s loan eligibility. They keep an eye on the client’s financial situation and provide them with the finest lending option.
- Trust Officer role: A trust officer’s primary areas of interest include trust services, estate planning, taxes, investments, etc.
- 3. Branch Manager role: A branch manager’s key responsibilities include managing staff, seeing to the efficient sale and provision of financial services, and upholding professional connections.
What is Investment Banking?
Investment banking consists of offering various banking services, such as underwriting, capital raising for businesses, the release of securities, and promoting mergers.
In the process of obtaining capital funding, investment banks serve as an intermediary. Regarding the selling and buying sides, there are two main sides to investment banking: The selling side entails trading securities, making money or gaining from a portfolio, as well as advertising securities, conducting research, and underwriting. Contrarily, buying entails providing clients with insightful guidance on investment services.
Investment Banking as a career
Ultimately, the traditional investment banking career path looks like this:
- Analyst role: After receiving your undergraduate degree, you begin in this field. Learning the basics is essential for being an analyst.
- Associate role: If you have a master’s degree, you start at the associate’s level. Analysts typically need an MBA or another degree to advance to the associate post. Your profession is just getting started now. Furthermore, you think independently.
- Associate Director or VP role: Here, you start making a genuine difference and get to take important decisions. Not at the client level, but at least in terms of operations and execution Additionally, this is the point at which you start to solidify your knowledge of the client sectors and business in general.
- Director role: Your focus switches from controlling escalations and revenue objectives to management and leadership. Most people reach this stage of life in their mid-thirties.
- Managing Director role: At this point, you are ideally managing entire departments.
Corporate Banking vs. Investment Banking
In a few words, corporate finance professionals are hired to manage a firm’s capital and make strategic financial decisions. In contrast, investment banking professionals are responsible for the capital-related growth of a company.
Here are the specific differences:
Financing focus
Corporate finance generally focuses on issues relating to capital structure, such as the choice between debt and equity financing, as well as analysis of the profitability and costs of financial projects. Investment banking, on the other hand, focuses specifically on assisting businesses in raising funds through stock trading or other strategies.
Clients
The clients are undoubtedly the main distinction between commercial banking and investment banking. Investment banks serve large, publicly traded corporations, while corporate banks serve to smaller, middle-market clients.
Money management
Investment banks manage huge sums of money and offer their clients advice on wise investments. For the most part, private borrowers and corporate banks manage daily financial transactions and smaller credit requests.
Performance measure
The performance of investment banks is correlated with that of the stock market, which is another significant distinction. On the other hand, corporate banks are impacted by credit demand and economic expansion.
In conclusion, when choosing a career, you must consider all your possibilities impartially. In essence, you assess your abilities against those needed for the position and see if you mesh well with the company’s culture. It applies to both possible job paths.
Already thinking of applying to a corporate or investment banking position? Contact us to find out what is the perfect role for you.
About TheStaffed
TheStaffed is a visionary organization that fosters an environment where equal importance is placed on our clients – their success, and our staff – their professional and personal wellbeing. Headquartered in Florida, we support hiring from coast-to-coast supporting national, regional, and local finance companies. We specialize in Financial Services, focusing on Corporate & Investment Banking, Wholesale/Retail Banking, Asset & Wealth Management, and Commercial Banking.
Our differentiated approach entails utilizing industry leading tools and processes along with direct industry experiences to eliminate current staffing challenges, and to connect hiring managers with fully vetted, highly qualified job seekers.
