Commercial banks provide basic financial transactions to individuals and small businesses. Commercial banks facilitate individuals to deposit money as their savings with a calculated interest, deposit, and cash cheques, apply for basic education or home loan, etc. they operate on a small scale and operate when they receive a charter from the federal government. They carry deposit insurance of US$250,000 as a regulation to protect consumers in case the bank fails. They generate income through service fees and interest rates on the loans.
In contrast, Investment banks assist companies, organizations, and other large entities in money management. They raise money from the capital markets and act as middle-man by marketing the company’s shares. They form the sell-side of the publicly-traded companies and sell the business interest to the investors. Moreover, they act as advisors for the companies and organizations by helping them to determine trade with others, merging with a company or acquiring a company.
Let’s investigate more about commercial banking and investment banking froma career perspective.
Investment Banking
Investment banking is a banking division that serves large corporations and handles a large amount of money. They create capital for companies, governments, and other entities. A few of the major functions involve underwriting new debt and equity securities, enabling sale of securities, facilitating mergers and acquisitions, determining trades for private investors, institutions, and others. Also, they guide the issuers on stock placement and issues.
Job roles in Investment Banking
Some of the common positions in investment banking include consultants, banking analysts, research associates, capital market analyst, and trading specialists.
Educational background
To get into the investment banking profession, one should be a graduate in finance and related fields like accounting, economics, or mathematics. Holding a post-graduate degree in business administration is an additional advantage.
Apart from academic education, earning an investment banking certification helps professionals to step up their career ladder at a faster pace.
Work Culture and Salary
A job in an investment banking stream is not a scheduled job. There is no fixed nine- or ten-hours job. It is a high-pressured job where you may have to leave the office at 2 AM midnight and reach as early as 9 AM.
In the US, the average starting salary for an analyst ranges between US$75,000 and US$96,000 per annum. A competent first-year banker may target annual earnings of US140,000.
Commercial Banking
The commercial bank offers investment products such as savings account, current account, fixed account, etc., to individuals and corporates as well. To facilitate transactions, they offer an array of facilities like mobile banking, credit card, Internet banking, ATM facility, NEFT, RTGS, and more. Also, it provides financial services to the general public like loan grants, advance money, and accepting deposits.
Job roles in Investment Banking
The entry-level job is a credit analyst for a commerce graduate and account manager for a post- graduate. A credit analyst analyzes the clients’ financial statements, competitive position, industry and determines the structure and pricing for a finance request. An account manager focuses on business development and is on client-facing role.
Educational background
To get into a commercial bank, a graduation in commerce is preferred. Taking financial analysis courses helps you get on the job easily as the courses are tailored for job profiles. To climb up the ladder, you may opt for MBA and other advanced programs.
Work Culture and Salary
Most of the jobs have a fixed timing of eight hours per day. The hours may extend during an emergency like the closure of certain important loan closures.
In the US, the average salary for a credit analyst is US$57,277 per annum and the account manager earns US$60650 per annum.
A final Note:
To get into investment banking or commercial banking, a certification program apart from academic qualifications would help you to gain the required competitive advantage to excel in the career.
