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Investment banking briefing: economic outlook & talent market in focus

Posted on June 2022 By Selby Jennings

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Looking into the future of investment banking, what are the talent trends shaping the global financial arena?

Despite a backdrop of post-pandemic volatility and economic uncertainty in 2021, the global investment banking sector is poised on a slow but steady growth trajectory, forecasted to slowdown to 3.8% by 2023. While many uncertainties remain, the overall economic outlook points to a consistent trend, albeit regionally uneven. According to the IMF October 2021 fiscal monitor report, the US witnessed a short-lived hit to its economy, with output already reaching pre-pandemic levels in Q1 of 2021. A closer look at Europe, in particular Germany, indicates a renewed fall in the fourth quarter of last year, but in China, the region went into sharp decline and came out earlier.

Even after accounting for regional differences, the picture ahead for the global economy suggests strong recovery. In Deloitte’s recent survey of 400 banking and capital market professionals, 88% of respondents anticipate banks’ top-line revenue to advance this year. But, to continue this path to economic prosperity and be well-positioned to overcome the global challenges ahead, the sector requires a strong pipeline of industry-leading talent. Therefore, having unique access to the trends in the workforce might be the best strategic advantage for firms.

Read on to discover some of the key talent factors and current trends in investment banking.

Talent movement & management

Across the board, many investment banks have been recruiting in earnest, perhaps indicative of the need to play catch up from 2020. When analyzing the talent movements at the global investment banks, many were willing to switch up careers quicker and further leverage their position in a candidate-driven market. With fees at an all-time high and banks accelerating their hiring endeavors, the M&A space was hot at the Associate and VP level.

At Selby Jennings, we have also observed a widespread growth trend within the banks to acquire smaller firms and entire teams. While this strategy is stipulated to reduce costs and strengthen cash flow, it is also a risky investment in terms of capital and talent as cultural conflicts are likely to incur.

In the US specifically, most banks exceeded their 2020 total fee revenues by April-May 2021. During this time, several banks began to amplify base salaries to $10-$25k – causing a rippling impact across the industry with most firms promptly matching their salary scales. If this wasn’t enough, banks of every size opened up their wallets and offered one-off bonuses in April; a trend that continued into the summer.

Glancing across the waters to Europe, a backlog of hiring from 2020 meant that banks made haste to fill vacancies last year. Interestingly, for Europe, it isn’t common practice to bring professionals in post-MBA like the US, so with smaller hiring happening across teams, training the workforce and maintaining substantial growth of the talent pool was imperative. In Hong Kong and China, hiring activity from funds has resulted in banks replacing talent poached from the buy-side. On the back of stringent Covid-19 restrictions, which prohibited inbound travel for expats, specialist investment bankers that remained were a hot commodity. However, with restrictions easing this year, we predict this trend to be reversed and therefore level the playing field for talent.

At Selby Jennings, we’re always on the pulse of the latest trends impacting the sector, meaning your investment banking recruitment process is in safe hands. Don’t miss our newest guide, The Investment Banking Briefing, for an introspective analysis on the current industry and exclusive talent insights from our survey results.