Investment Banking Industry

Relevance of Investment Banking Industry to the World Economy

With slow and gradual recovery of banking sector across the globe after the pandemic woes have faded a little, the worldwide economy is bouncing back to the normal, but it’s still long for it to fully revive. Meanwhile, a lot of students graduated in finance and related subject domains in the last eight-nine months, and they are desperately seeking a break in the investment banking industry. If you are among one of them seeking opportunities in the banking domain, you must have once given a thought about the existence and role of the banking sector in the global economy.

The post-pandemic world is going to bring ample opportunities to the aspirants, but the most critical question is – Do they have a genuine interest in the said field? Do the banking aspirants really understand the financial markets? Are they ready getting into the grind of the highly demanding finance industry? If the answer to all the above questions is Yes, you are born to be a banker and no one can stop you from being that.

US – The Largest Global Financial Market

US had been the largest financial market globally from time immemorial, and therefore, more opportunities for aspiring banking professionals here. As per a Statista report, the revenues that US financial industry generated in the year 2019 was a whopping USD 2,070 billion, of which 5.9% was the contribution from the much-crucial sub industry known as “Monetary authorities-central bank”.

Contemporary Economy and the Banks

To understand the significance of modern banking, you will first need to understand how the economy works in the present day. The economy, on whole, constitutes two major financial processes – credit and debit. Banks and other financial services firms extend the credit to its customers (individuals or companies), and in return, the customers get debited to the lending firms.

The entire cycle in the banking industry that repeats itself time and again, comprises lending and borrowing of capital, and in the overall scheme of things, banks play a critical role in keeping the cycle in motion at all times. A smooth-functioning economy is vital to any country’s growth, and the banks and the other financial services firms aid to the same by powering the banking cycle to its optimum.

Major Functions of Banks & Financial Services Firms

Now that we have understood about the working of banks and the related investment banking industry, let’s discuss in detail about the primary functions of banks in relation to their contribution to global economy. We will also be taking a look on what banking professionals do to earn their livelihood, and what does it take to be a banker.

Meanwhile, banking aspirants can enrol in the investment banking certifications available online to prepare well for the upcoming opportunities post the pandemic. But, while choosing a professional banking credential, make sure that it’s industry-relevant and serves to your end career goals.

Here are the three primary functionalities of banks located across the world:

Safeguarding Monetary Assets of Customers

The modern economy works digitally, and a majority of monetary transactions happen online, especially after the pandemic has had hit the world. Post-COVID, there will be seen an increase in paperless transactions made electronically via either debit/credit cards, digital wallets, cryptocurrencies, or some other means of electronic payment. And hence, the role of banks will further intensify in the post-pandemic world. As more and more people across the world will start keeping their money in the banks in a post-COVID world, the primary responsibility of the banks will become keeping the customer’s monetary assets safe, digitally.

Helping People Invest Their Money

While safeguarding people’s money in a secure environment is the foremost responsibility of a banking organization, the second vital functionality of a bank is to assist and guide customers invest their money wisely to get desired ROI. Millions of people each year seek assistance from investment banks for getting their hard-earned money invested in the financial markets to generate big returns.

Offering Loans to the Needful

The third most crucial role a bank plays in the functioning and well-being of a country’s economy is offering credit lines to individuals and businesses in need. No matter how much a company or an individual has saved, there always comes a point in time when people need huge sums of money, either in an emergency situation, or to source funds to start their dream projects. Banks do come to rescue of these people and in return, charge interests, thereby generating profits for themselves. As a matter of fact, banks only keep 10% of the money deposited to them by the customers, and lend the remaining 90% in the form of loans to make their own profits.

Hope the article has provided aspirants with much-valuable information related to banking and finance. It’s highly advisable to go for attaining professional credentials in the finance domain to gain a competitive edge while seeking a break into the said industry.



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