Investment Banks Still Recruit from Business Schools: Unconventional Routes to a Banking Career
Yes, investment banks continue to recruit graduates from business schools, including those without prior experience in banking or finance. This practice is strategic and necessary, given the high turnover rates among analysts and the unique value that diverse candidates bring to the tables.
Why Business Schools?
Beyond the conventional route of hiring directly from undergraduate degrees, investment banks recognize the value of MBA graduates, despite their lack of pre-MBA banking experience. These graduates offer a fresh perspective and a range of skills that can enhance a team's capabilities. This diversified approach has become increasingly important as analysts tend to leave investment banking within the first three years, often opting for opportunities in private equity, hedge funds, or completely outside the finance industry.
Why Diverse Candidates Matter
Diverse candidates, such as those with experience in fields other than finance, can bring a myriad of benefits to an investment banking team. These individuals often possess greater maturity, a broader range of commercial acumen, and a network of business contacts that can prove invaluable over time. A study conducted at Goldman Sachs compared the performance of analyst promotions and MBA hires, revealing that while analyst promotions outperformed MBAs in the early years, the reverse was true at the mid-career level. By year four or five, MBA hires began to outperform their predecessor counterparts.
The Myth of the MBA in Banking
A common myth in the investment banking world is that an MBA is essential for career progression. However, this is not the case. Investment bankers who pursue an MBA do so for personal and professional development, not for career advancement. Once an individual leaves investment banking for an MBA, they generally do not return, as their career trajectory changes. Consequently, investment banks are more likely to hire career switchers from MBA programs rather than former investment bankers looking to return to the industry.
Recruitment Strategies for Non-Finance MBA Graduates
Banks have developed specific recruitment programs aimed at attracting MBA graduates, regardless of their background. These programs often include training, mentorship, and networking opportunities. Participation in finance-related clubs, internships, and other professional activities during business school can significantly enhance a candidate's prospects.
Conclusion
Investment banks continue to value the diverse talents brought by MBA graduates, including those without prior banking experience. While direct hires from undergraduate degrees are still crucial, the growing importance of experience outside finance and a broader skill set makes MBA graduates an essential part of the investment banking landscape.
For more insights on navigating an MBA program to enter investment banking as a non-banker, click here.