The finance industry has seen an exponential growth in the last three decades. As a result, many specialisations have cropped up within the broader domain of finance, which in turn have created a number of career roles.
Streams in finance such as investment banking, risk management, Islamic banking, and retail banking require people with expert knowledge and specific skill sets in the respective fields. Since a career in finance requires you to pick your specialisation, this article aims to clear your concepts on the different streams of finance and investment so that you can choose a stream that is appropriate for you.
Also known as consumer banking, this type of financial system is based on mass-market banking, where individual customers use local branches of a larger organised network. This system offers services such as savings and checking accounts, mortgages, retail and business loans, debit and credit cards, and investment opportunities such as mutual funds. Retail banking focuses on being the one-stop destination for its consumers for a multitude of financial services.
Pursuing a career in retail banking exposes you to a hands-on experience of managing the day-to-day operations of commercial banks. You will also develop a comprehensive understanding of foreign banks and their operations. You can work for banking institutions across the world.
Investment banking deals with the creation of capital for other companies, governments or other regulation entities. The investment banks help in the sale of securities, aid in facilitating acquisitions and mergers, reorganisations, and broker trades for institutional and private investors. They also offer guidance to the consumers regarding the sale and purchase of stocks.
A career in investment banking helps you understand the inner workings of capital markets, and helps you create and maintain value through detailed analysis. It also optimised your decision making skills and teaches you how to maximise corporate value and reduce business risk.
This is a banking system that bases its operations on the principles of the Islamic or Sharia laws. Islamic banking also gives importance to two principles of sharing of profit and loss, and prohibiting collection and payment of by investors and lenders.
Islamic banks make profits through a system of equity participation which requires borrowers to give a share of the profits rather than paying interest.
Since this alternative banking system is based on ethical banking, a lot of countries are adopting this system of finance and banking. Hence it can be advantageous to pursue a career in Islamic banking. Many universities offer masters in Islamic banking and finance online. You can obtain a degree as per your convenience and budget.
Private equities, mergers, and acquisitions
Private equities refer to the shares of corporations that are not openly listed or traded. They are treated as sources of investment capital. The private equity industry consists of institutional investors and large equity firms. These create pools of private equity funds for privatising large organisations.
Merger and acquisitions refer to the consolidation of corporations achieved through a variety of transactions. A merger is the consolidation of two firms together to form a single one, whereas an acquisition involves one firm taking over another one.
A career in M&A will help you gain a deeper understanding of corporation governance and ethics, and the equity strategies of MNCs.
This financial aspect refers to the different activities performed by experts to manage corporations from going bankrupt. Stockbrokers and risk analysts use financial strategies such as investment diversification to manage or mitigate financial risks.
With a career in risk management, you can look forward to working in different risk management areas such as security analysis and alternative investment strategies.
Today, it has become imperative to specialise in a specific financial stream. Pursuing a career in any of the above-mentioned financial streams can take your career to greater heights.