Why is banking becoming more competitive?
Why is banking becoming more competitive, given that more and more top students choose to go to startups in the Valley? Isn't the whole point of pushing banking recruiting earlier and earlier in order to snap talent early, before they've had the opportunity to consider other options?
Same number of seats or fewer seats. Ever increasing pool of applicants. Even the lowly, WSO besmirched middle market banks can afford to be more selective. I don't buy for a second that the valley is draining talent - perhaps +/- 10% of any target's given class who is on the fence may choose SV instead of wall st., but those are the lucky ones to have a choice. Everyone else is still fighting for a spot to get in. One just has to look at how quantity of applications for summer analyst seats have been trending the last decade or so, and the corresponding offer-to-application ratio. I think offers hover around 1-3%? Also consider that not every summer analyst comes away with a full-time offer, and it frames things that much clearer...
One Movie: THE WOLF OF WALLSTREET
Because the "talent drain" coming from Silicon Valley is not enough to offset the massive influx of interested students.
What makes you think it is becoming more competitive?
Don't know why you got thrown the monkey shit. It's considerably easier to get hired now then at anytime since 2007. In 2009 entire grad programs were cancelled. In 2008 if you had started at Lehman, well...
This is just a theory, but I think a lot of finance students that were interested in trading have switched over to Investment Banking. Trading's an excellent field, but a lot of students seem wary about it over all.
Also not sure about startups. Groups like GS TMT and Qatalyst seem to cater pretty well to individuals interested in tech and have seen increased applications.
Interesting point, makes sense!
I think there's more of a stigma now against doing anything "sales" related, even if its prestigous
Because "all of a sudden" people started to finally realise that tech isn't the hot shit into infinity that is made to believe by force shoving "Meet this 20-something year old entrepreneur ..." Facebook and Medium garbage up your throat.
I said this in the Amazon MBA recruiting thread and the tech is overrated for MBA thread and will re-iterate it here.
Unless you're hardcore STEM with very strong programming skills and technical knowledge, tech is an overrated career path.
Banking, despite the bad rep it gets, offers awesome compensation, great exit opportunities, and relatively interesting work with very talented people.
People are realizing that the vast majority of startups are total crap. Why join an unstable startup for crap pay and "paper" money rather than a stable lucrative career such as banking or consulting?
I have always believed that tech is hype, an obnoxious bubble. I'm glad that people are waking up to this reality and thinking through in a more sober manner.
Most tech jobs are in SF Bay Area and Seattle, which are awful places.
Dances hates on SF and Seattle every chance he gets, but that's a topic for a different post. The rest of what he just wrote is accurate in my opinion. If you're not a 'tech' person (in that you don't have strong technical skills), you're not likely to rise through the ranks to run a tech company, and there will be a natural limit to the jobs you can do. Similarly, you don't get to run a bank without understanding finance. That's just how it is.
There are only a handful of well-defined starts to career paths that make meaningful amounts of money. Finance is always likely to be one of those paths, so if you're not sure what you want to do with your career at 21 or 22, investment banking and consulting set you up better than just about any other path you might choose. I have some friends who killed it in the start-up world. But you're rolling the dice there. I have a lot of friends who are extremely clever who didn't yet hit the jackpot in the start-up world. It seems like an enormous gamble to me, and I used to be quite the gambler. Investment banking is a safe bet that maximizes your career options, and that's always going to be attractive to a huge number of people, so the applicant pool keeps increasing, especially since so many non-targets now try to break into Wall Street from Bumfuck University.
I think there are two big differences since I was recruiting almost 20 years ago that have made banking relatively more competitive (or more democratic at least).
The first is that non-targets have learned a lot more about banking and the playing field is considerably more level, so there are many more candidates. Part of this is due to greater access to information that WSO and other websites provide; it used to be that the banking recruiting process was this mystery that was only passed down amongst target schools and that has changed. I also think bankers are much more open to casting a wide net, and for a long time there was frustration at the sense of entitlement that many target school kids were perceived to have had (although that has receded considerably).
The second is the process is considerably more structured. I went to a target but didn't do an internship in banking (albeit in a relevant industry), had zero prior finance experience, and my grades were average at best. I didn't get on any interview lists. Still, I was able to cold call bankers who covered the industry I interned at and was able to get 6-7 decent interviews and 3 offers. That's not happening today. Even our summer interns have relevant experience and the process is so structured, it feels hard to imagine my path is possible today.
Completely agree with this. Access to information is everything.
I also think LinkedIn has something to do with it but that's just a theory.
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Just throwing in another theory here.
I thought grade inflation/deflation was dependent on the university? Have grades really started to go up generally over the years?
I suspect it is a bit of both. Some grade inflation across the board but more so at some institutions. Either way, it would still mean a larger pool of candidates making the cut though. If anything, as the change is not uniform across all schools, it is hard for recruiters to simply raise the GPA cut-off across the board.
Another contributing factor: The very top students from countries like New Zealand, Australia, and South Africa (but really across the world) are more frequently deciding to study in the US/UK rather than back home. In the past these guys would have gone on to work for BBs in, say, Sydney, whereas now they're competing for the New York/London spots.
Relatively speaking, very few international students are hired in the U.S. by BBs (much less so by even smaller banks), so I’m not sure your synopsis is even close to accurate. There’s plenty of talent in the U.S. for companies to utilize; most banks would rather not deal with the regulatory issues and costs associated with hiring non-citizens.
I disagree. I personally know tens of internationals at BBs in New York, as well as at boutiques like PWP and Lazard. I also know people who interned at these banks in their Junior Summer, and were then pushed to London for full time as, I agree, the visa situation is a bit more lax (but I did say New York AND London in my original comment).
Wharton is 19% internationals and Stern is 24% at the undergraduate level -- most of these kids want to land a Wall Street job too. Go over to the UK and the percentage of international students for colleges like LSE is well over 50%. At one of the Super Days I had in London, only 1 of the 12 students were from the UK.
There used to be 4 decent front office positions to apply for if you're at a target or semi-target.
IBD, S&T, ER, and some kind of asset management (i.e. from Blackrock and I'll even include PWM).
3 out of 4 of these groups have much less seats available today while the # of college students continue to increase. Even a small headcount cut has a massive multiplier effect on competition, as these seats usually had 50-100 qualified kids to begin with. Nothing compounds faster than fear. I recently had 300 applications for 1 day for 1 posting and of the 10 apps I followed up with, they all had ridiculous amounts of internship experience as ugrad juniors and seniors.
Look at how competitive college applications have become. That ripples through to top-tier jobs such as unicorns and IBD.
diversity
Oh yeah man there are so many blacks and Hispanics and women in investment banking and they’re taking all those spots white men deserve to have
AndyLouis how is this flagged as the best response in the thread? Typically for sarcasm, but when its snark is based on ignorance
The talent pool is much larger, as is the number of students competing for seats thanks to the increased awareness of what IB through sites likes this.
Actually, I think it's more competitive BECAUSE of sites like this, Mergers & Inquisitions, and the ease of access to prep guides + useful resources. The ease of access removes the advantage of information scarcity so your competition pool is at a more even level. Simply put, technology allows people to be more well-prepped. This is why networking is becoming such an important factor because being likeable is one of the few scarce differentiators.
Of all the thoughts provided on why the industry is getting more competitive, this is probably the most important one. A few years ago, students from the most elite schools leveraged their competitive advantage over non elite uni students that had no real clue about the industry and this has dramatically changed because of the availability of information to a larger pool of candidates...
The world is also just getting more competitive in general. For example, just a few days ago, the Ivy League acceptance rates were released for the Class of 2022 and almost all of the Ivy League colleges' rates went down as they faced a higher number of applications.
Great point. Isn't that such a true and terrifying notion...the idea that being a palatable human puts you leagues ahead of others.
I think the competition increase in IB is pretty much on par with the same thinking as "whey are schools getting more competitive to get into". In many cases, as information becomes more readily available, it gives more people the ability to learn about these different ideas. I mean again this sounds anecdotal, but I don't think I would have found the world of high finance if it weren't for the internet. I also like that theory someone made above, the fact that S&T is a dying industry in the world of banking might also be applicable. I am guessing the ratio of traders to IB has been reduced drastically.
Asian invasion.
I don't know if anyone has said this yet, but banks have become increasingly corporatized in the sense that people are staying in banking longer term for their careers. Pay has come down, and so banks have been attempting to push lifestyle improvements (to an extent). So what happens is that everyone from Associates to MD's are staying on longer. This makes the advancement pipeline at those levels more competitive as banks have fewer slots to fill because there isn't as much turnover.
At the junior level, many more analysts are staying on past their second year. There are only so many analysts a group needs, and so having a new layer of senior analysts in the group takes slots from "normal" analysts in that they don't need as many to cover the workload.
This is part of it. It affects analysts less so than the rest of the firm, obviously, but less turnover in general means less openings.
But if the same number of analyst-hours are needed per group, and lifestyle improvements are decreasing the number of hours per analyst, then don't you therefore need more analysts to achieve the same quantity of analyst-hours?
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