Investment Banks Shift Focus to Soft Skills

Following the financial crisis in 2008, financial institutions began to take a long look at their corporate cultures and in particular the elements that led to excessive risk taking. What many firms found is their hiring practices focused on technically competent people, generally with above average risk tolerance and a certain competitive edge. While this competitive spirit certain is a critical element in the success of the financial industry, firms are now seeing this spirit must be tempered with an understanding of social responsibility and client empathy. As a result, institutions are looking to strengthen these softer skill areas. This increasing demand is being met by schools across the United States where social responsibility is being taught as a key element of a business program.

Firms Need to Shift Focus in Order to Attract Talent

In the past, the promise of a large bonus check and the prestige of an investment banking career was enough to encourage the best and brightest into the industry. Now, however, the status of the profession has taken a huge hit, and the industry is no longer seen as the elite landing place it once was. Careers in securitization or trading for example now have negative connotations that hiring managers need to overcome when making a pitch to young, idealistic students. As a result, investment banks are being force to adapt positions, requirements and cultures in order to still attract and retain today’s top grads.

Candidates Now Viewing Finance as a Wider Market

Increasingly, candidates are considering the wider financial industry when leaving either an undergrad or graduate business program. In the past, new grads would be focused on their dream industry, whereas today they view opportunities much more broadly. This also creates more competition from the perspective of investment banks when seeking top young talent. The negative connotations discussed previously also work against investment banking when compared to the wider financial industry

“There has been a change in MBA recruitment since 2008 and especially in the past couple of years,” Faye Woodhead, the Head of Graduate Governance, Planning and Strategy at Deutsche Bank told the Financial Times. “Historically, people would focus on one industry in their career search. Now the range of options is much wider and there is a move to hedge funds, private equity, technology firms and corporates as well as investment banking.”

Ms. Woodhead also suggested that a significant culture change is underway within the industry. Solutions are more client-centric and even traders are expected to get in front of clients and build critical relationships.

Culture Change Critical for Success of Investment Banking

As the industry begins to recover, many hiring managers are starting to see the impacts of the industry’s reputation on new grads. Over the past few years, the lack of new hiring has masked investment banking’s shortcomings in comparison to peer financial segments. Now, as competition heats up, investment banks must make the case to young people that the industry offers an ethical and rewarding place to earn an above average income. This will be a tough proposition to sell to individuals that entered school right at the peak of negative media attention for the industry. However, progressive changes from leading institutions are making headway, and offer the promise of a more attractive corporate culture for new, ethically-focused, grads.

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