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Top Investment Banking Trends to Watch in 2021

Dec 15, 2020| Article

The global financial crisis and technology disruption has brought the investment banking industry under scrutiny, resulting in restructuring and redefining their business models. A look at the new focus on digital transformation that may signal high-end opportunities for the investment banking industry in the year 2021.

2020 has been a riotous year for most of the companies. The one realm that witnessed significant growth is digital transformation, despite uncertainty and market volatility. The rapid shift in demands from the investors, clients, or prospects pushed the investment banks to pivot their strategies continuously and led to historical changes at a faster rate.

Watch out for the trends that will dominate the year 2021 and beyond.

Investment banking trends 2021 and beyond

Investment banks now know how to be prepared and navigate the unexpected. Let’s see what the year 2021 might hold for them.

High-frequency trading

Orbis research studies indicate that the global high-frequency trading market will nail a bullish growth through the years 2020-2026. HFT platforms use complex algorithms, analyze the market, and spot emerging trends in a fraction of a second.

High-frequency trading (HFT) is generally employed by large investment banks. The firms that implement HFT can expect high favorable returns on trades, giving a more systematic approach to active trading. Though it as an advantage for large firms only, there will be a rise of HFTs in the years to come.

Virtual IPOs

The pandemic has forced companies to opt for virtual IPO. Traditionally, the roadshow and pricing of the IPO would take around two weeks and is dependent on face-to-face interactions among the management and prospective investors. Automation of the process during pandemic decreased the time to 50 percent. Also, lockdowns accelerated the demand for remote connections and transactions. Now, the roadshows and test-the-waters meetings will be conducted virtually.

Goldman Sachs has developed an AI system “Deal Link” to track legal diligence and reports necessary for a successful IPO.

Digital technologies

The COVID-19 environment pressed for a second wave of digital transformation, i.e., consolidation and automation of mid- and back-offices (the first being businesses becoming consumer-oriented). Some of the digital technologies that will get introduced or redefined in the year 2021 include:

  • Robotic Process Automation (RPA) to save money in operations

  • Mobile payment methods as requested by most of the clients or prospects

  • Cyber hygiene among clients or prospects

  • Use of AI and other smart technologies to improve existing systems

  • Major investments in the hybrid cloud from popular service providers

  • Confidential computing to address data and communication privacy

  • Automation of data distribution through big data analytics, and real-time reporting

  • Monitoring and tracking of compliance and upcoming regulations (if any)

  • Increased security by tapping the core of blockchain technology in transactions

A shift in hiring trends

As investment banks turn toward these technologies, redesigning of jobs is the need of the hour. They need to ensure that their talent profiles have an understanding of new technologies, regulations, risks, and new changes. Also, the investment banking profession is one among many professions where face-to-face client service is important. So, the nature of the job for investment banking professionals is also changing.

Investment banks have started hiring professionals from cross-industry, acquiring talent from tech companies such as IBM, Microsoft, and others. Investment banking professionals need to upskill themselves and augment their understanding of these technologies. It is crucial to keep oneself updated in the domain through recent investment banking certifications and primary courses in trending technologies. In brief, investment banking professionals must explore financial, technical, and interpersonal skills as well to stay in the race.

Endnote

As the investment banking industry tunes-up for the new decade and search for new talents, where do you want to see yourself in the year 2021?

The opportunity, risk, and reward lie in your answer as an investment banker. It’s time to safeguard your earnest position in the investment banking career. Here are a few potential questions for you to get started for the year 2021.

  • How quickly can you accommodate yourself when competition and markets change?

  • Do you have a learning methodology (like earning an investment banking certification) in place to stay updated?

  • Do you have a strategy to upskill and upgrade from the existing position?

  • Do you interact with your IT team to understand AI, Robotics, and other technologies in investment banking?

  • Have you undergone security awareness training?

  • Are you prepared for ‘talent exchanges’ and other contingent workforce projects?

  • Do you have the right physical and virtual mix of remote employees?

Get associated yourself with new strategies and transformations. May this year bring all new opportunities, learnings, and achievements to accommodate yourself with the evolving trends.

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