The investment banking industry has long been known for its emphasis on high-risk, high-reward lending, with analysts saying the industry has seen its growth stagnate as the economy continues to shrink.
But that may not be the case in the US, with investment banks looking to diversify and offer more options to their clients.
With the stock market in free fall and a weak dollar, the value of a traditional investment bank has gone down by more than a third in the past two years, and the number of investment banking jobs has plummeted by about 2,000, according to data from the National Association of Investment Banking.
While the industry is struggling to compete with smaller, boutique investment banks, a number of big banks, including Bank of America, JPMorgan Chase and Wells Fargo, are increasing their presence in the sector.
“We are seeing a very positive response from the big four,” said Mike Johnson, chief investment officer at the Investment Banking Institute, a non-profit that works to provide the industry with financial education and information.
“The number of companies we have working with them is just phenomenal.
The volume and scope of what they offer has grown exponentially.”
While investment banking is not as prestigious as some of the other banking sectors, there are many factors that can help an investment bank differentiate itself from competitors.
It can be a key asset managerFor many firms, the key to success is knowing where your money is going, said Gary Smith, a partner at investment banking firm Bain & Company.
If a firm wants to invest, it needs to have the right asset management.
“You can’t get a bank to do everything, but if you know where you are going to spend your money, you can do everything,” Smith said.
“We’ve been trying to do it that way for a while.”
Investment banks also can offer better adviceInvestment banking firms are increasingly looking to offer better, more personalized advice, according a survey by investment banking analyst Jefferies.
“Investment bankers are the face of investment lending,” Smith told CNBC.
“That’s the kind of people who will tell you what you should invest in and what you shouldn’t.
It’s the people that get the most attention.”
While there are certainly differences between the types of investment banks that offer their services, Johnson said the most important thing is the approach.
“The key to getting a good return from your investment is the same thing that is the key for a bank: know where your customers are,” he said.
“They want to make sure they know what they’re getting into.”
For the investment banking world, there’s little doubt that the rise of a new breed of investment bank is a trend that will continue, according Toke Köhler, a managing partner at The Investment Bank.
“I think the trend for investment banking has been pretty steady and steady, so I’m not surprised,” Köhl said.
As more firms enter the space, however, the question of which investment banking firms can compete is likely to become more complicated.
“It’s really hard to know,” Johnson said.
“[The] industry is just starting to get to a point where the investment banks have been able to really compete with the boutique banks and small banks, and that’s going to change.”
Read more from CNBC.com:Investment Banking industry faces sharp slowdownThe next big challenge for investment banks is that they have to be more innovative, according Johnson.
“If you can innovate, you’re going to be able to keep your clients, because that’s what they like to do, and if you can’t innovate, the customer will leave,” he explained.
“At the same time, I think it’s important to keep an eye on how the industry does that.”
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