How to ace this important interview question
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The “Why Investment Banking?” interview question
You’re almost guaranteed to be asked this question in an investment banking interview. Of all the jobs you could have out of university, why investment banking?
The key is to quickly demonstrate that you’re smart, that you understand what the job entails, and,having a full view of what’s required, you still really want to do it!
At the end of the day, investment banks want Analysts/Associates who are –
- Smart enough to do good work;
- Can handle the hours;
- And won’t quit.
This guide will show you how to demonstrate the above three qualities in a concise way.
An example answer to the “Why Investment Banking?” question
Here is an example of how to answer the question concisely:
I want to work in investment banking because it’s the fastest way to learn financial modeling, valuation, Excel, and to understand the nature of large corporate transactions. I’m aware that the job has a strict hierarchy and very long hours, but the opportunity to gain such valuable skills and be exposed to high profile transactions so early in my career is the most exciting opportunity I can think of.
The strong points from this answer include:
- Awareness of the skills required for the job (a lot of time spent in Excel, Word, and PowerPoint)
- Awareness of the hierarchy (senior bankers will lean hard on junior bankers and all work rolls downhill)
- Awareness of the long hours (80+ hours per week)
- Excitement about a steep learning curve and exposure to high profile deals
Positive reasons why you want to go intoinvestment banking
Valuation & financial modeling work
Investment banking offers the opportunity to become an expert at building large, complex financial models at the earliest stage of your career. While bankers aren’t necessarily great investors, they do spend a lot of time on valuation work, and this can be an excellent way to start your career.
Exposure to high profile transactions
Most of what bankers work on is top secret until it’s publicly announced, and when it is finally announced, then it’s usually on the front page of the business section. If you say something to this effect,itwill likely stroke the ego of the interviewer, and it expresses a pretty compelling reason to go into the industry.
An extreme challenge and steep learning curve
If you can call out the fact that IB requires extremely long hours and you’re actually motivated by the challenge, that will go a long way toward making you an appealing job candidate. It’s helpful to draw parallels to your personal life, such as competingas an elite athlete, musician, or in some extremely challenging event (like climbing Mount Everest).
Negative reasons why you want to go into IB
Doing it for the money
Even though the money is most likely a huge motivation for you, it’s not a good idea to say that you’re motivated by how muchmoney bankersmake. It may be true, but most people find it distasteful, so avoid saying that.
Doing it as a stepping stone to something else
This may also be true, but you should avoid saying anything about ultimately wanting to get into private equity or hedge funds and thinking that IB is a great way to get here. When a company hires you, they want to think that you will stay with them.
Financial modeling
One of the top reasons that investment banking may really be the job you want is the experience and exposure to financial modeling. Analysts and Associates have the opportunity to work on building various types of financial models for important transactions, which would never happen in most other jobs straight out of university.
Yes, new bankers have to do a lot of truly mundane things (like print and bind pitchbooks, make word edits, etc.), but they also get to learn one of the most sought-after skills in finance.
Screenshot from CFI’s .
More Career Resources
Thank you for reading CFI’s guide to answering the “Why investment banking?” interview question! If you’re looking for a job in IB, then be sure to check out our guide on how to get a job in investment banking. It contains tips on networking, writing your cover letter and resume, and information on technical skills that are required.
Once you’re set on a job in IB, you can really ace an interview by being super strong technically. The best way to obtain the necessary expertise is through our financial modeling and valuation courses. We’ll teach you how the pros build valuation models from scratch!
Additional Resources
- Investment Banking Interview Form
- Walk Me Through a DCF (Interview Question)
- How the 3 Financial Statements are Linked
- See all career resources
- See all capital markets resources
FAQs
Specifically, investment banking interests me because it offers the opportunity to develop substantive analytical skills, while developing a close network of colleagues. While working long hours is scary to some, to me, it is in a strange way exciting.
Why do people want to work in investment banking? ›
Investment banking offers the opportunity to become an expert at building large, complex financial models at the earliest stage of your career. While bankers aren't necessarily great investors, they do spend a lot of time on valuation work, and this can be an excellent way to start your career.
What is the benefits of investment banking? ›
Valuable benefits packages
Investment banking careers offer appealing compensation packages, which extend beyond salaries. Professionals in this field frequently enjoy generous benefits, including commission and bonus opportunities, comprehensive insurance coverage, and stock options.
Why investment banking is worth it? ›
Investment bankers are typically the highest-paid workers in the finance industry—high salaries are most prevalent even among younger employees. The starting salary for the typical investment banker exceeds that of most other finance positions, but working in this field has its challenges.
What attracts you to a role in investment banking? ›
Investment banking offers opportunities for ambitious people, so ambitious and interesting people go into it. On the job, the people you'll meet and work with will be knowledgeable and passionate. Being in a workplace with like-minded people is one of the most rewarding parts of banking!
What to say when asked why investment banking? ›
More Examples
- “I've been extremely interested in investment banking ever since a freshman event where we visited New York. ...
- “I'm doing a financial modeling specialization at school and am really interested in furthering that skillset. ...
- “The thing I'm most excited about in investment banking is the deal-making.
High-Stakes Deals and Transactions
At the heart of an investment banker's earning potential lies their involvement in high-value deals and transactions. These professionals facilitate mergers, acquisitions, and IPOs for corporations, reaping substantial fees in the process.
Why stay in investment banking? ›
You will make more than any other career path
If you stay on as a banker for life, you can go from making $150K per year as an Analyst, to $300K per year as an Associate, to $450K per year as a VP and then much more if you can continue to get promoted.
Why are you interested in working in investment management? ›
Investment Management is an industry demanding highly analytical and dedicated individuals. In return it provides a challenging and stimulating environment where high calibre candidates can thrive in a fast paced environment.
What is the main goal of investment banking? ›
The primary goal of an investment bank is to advise businesses and governments on how to meet their financial challenges. Investment banks help their clients with financing, research, trading and sales, wealth management, asset management, IPOs, mergers, securitized products, hedging, and more.
Long Hours: Investment banking is known for its grueling work hours. Stress: High stakes and tight deadlines can make the job highly stressful. Work-Life Balance: The demanding nature of the job can affect work-life balance.
Why is investment banking so competitive? ›
That said, investment banking is a highly competitive field. Because the pay is so high and the job is so prestigious, particularly in cities such as New York, applicants far outnumber job openings every year. Having the right skills and being able to display them is paramount for getting a foot in the door.
Why are you interested in a career in investment banking? ›
I was fascinated with the process of investing, so I decided to pursue a degree in finance. This has led me to seek opportunities for a career in an industry I truly enjoy. I understand this is a high-pressure industry, but I'm ready and willing to take on any challenge that may come my way."
How do I know if investment banking is for me? ›
To make sure you're a good fit for investment banking, here is a list of traits that are considered important in the industry: Willingness to work extremely long hours (80+ per week) High attention to detail. Ability to take direction well.
Why is investment banking so hard? ›
Investment bankers are notorious for working long and demanding hours, with work weeks well exceeding 40 hours being the norm for entry-level investment banking analysts. In a competitive culture where putting in extra-long hours is regarded as a badge of honor, a 9-to-5 routine is pretty much unheard of.
What makes investment banks unique? ›
Investment banks are best known for their work as intermediaries between a corporation and the financial markets. That is, they help corporations issue shares of stock in an IPO or an additional stock offering. They also arrange debt financing for corporations by finding large-scale investors for corporate bonds.
What is an investment banking interview question? ›
Investment Banking Interview Questions Category 3: Discussing Deals, Markets, and Companies. This category includes questions such as: “Tell me about a recent deal.” “Tell me about a deal our bank worked on recently.” “Tell me about a company you're interested in.”
Why are you interested in investment management? ›
If you would like to help others discover the best ways to get substantial returns on their investments, are intrigued by analyzing risk, or are interested in helping businesses buy other businesses, consider a career in investment management.
