What is Banking and Finance?
Banking and finance career paths all revolve around money. For the most part, working in banking and finance will require a bachelor’s degree in a related field. However, there are some opportunities to pursue on your way to a finance degree that can help you in the long run. Though these options are limited, knowing finance is beneficial in every industry. Starting your own business or exploring the field a bit before committing to a university degree can help you make the decision.
Finance is a broad category that encompasses a significant portion of the US economy, corporate revenues, stock valuations, and gross domestic product (GDP). All areas of finance revolve around money, and the most commonly known sectors are banking (companies include Chase, Citicorp, Wells Fargo), institutional investments (including Goldman Sachs, JPMorgan, Merrill Lynch), personal finance (credit cards, mortgages, taxes, insurance, personal investing, Venmo/PayPal, etc), and others like private equity, corporate and government funding, financial advising, accounting, and mutual funds. Everyone needs to have at least some basic knowledge of finance, or the importance of money in our society, and taking a few courses to understand personal finance is highly recommended.
Why we Love Banking and Finance
The monetary finance economy in our world has far eclipsed anything in our material economy. For example, the annual income of all Americans combined is only $16 trillion, while settlements of all financial settlements transactions in the US amounts to $5 quadrillion (that is, 5,000 trillion!). Given the magnitude of money present in American society, working in the financial sector can make you pay a lot of money. However, the traditional financial markets, like the companies on “Wall Street” (a term used to describe the US investment world), such as hedge funds, and private equity, are quite elitist, and tend to only recruit from the top universities in the country. Though some executive positions in banking can be just as elitist, working for large corporate banks at an entry level can lead to more opportunities, training, networks, and experience.
However, like in many other careers, though, much of this industry relies building connections with the right people. With the right network, gifts, and talents, working hard can get you into a prestigious and stable company. Wall Street is not the only game in finance; finance is involved in every company in every industry and every company needs people to perform financial roles. Some top roles in companies include Chief Financial Officer (CFO); Chief Accounting Officer (CAO); Controller; Treasurer; and various professional jobs in taxation, audit, analysis, risk management. In addition, the industry of Fintech, a relatively new category that deals with financial technology, is growing more powerful and prominent with emerging opportunities happening every day.
What are the most important things you need to know about pursuing Banking and Finance career paths?
With a small amount of training, you can become an accountant or bookkeeper, which are both very in-demand positions. Finance careers require you to be extremely detail-oriented, make few mistakes, and be highly ethical with the finances of your employer. Having a strong ability with numbers is essential for most finance jobs. If you are interested in finance, but are not detail-oriented, then at least learning the basics of accounting will help equip you with the fundamentals of finance you can use in any industry. As a career progresses in the finance industry, the need for a high level of detail decreases as management and oversight roles become available to steady and high performers.
Wall Street is in downtown New York City and is home to many of the largest financial firms, such as Goldman Sachs, Morgan Stanley, and other well-known firms. Most investment brokers have offices in the big US cities, as well as foreign cities like London, Hong Kong, Singapore, Frankfurt, Zurich, Shanghai and Paris. Silicon Valley, a region near the San Francisco Bay area of Northern California, is the biggest space for venture capital companies such as TDK Ventures, Fenox Venture Capital, and many more. Most US cities have large financial districts to get plugged into, especially Chicago, Boston, Miami, Houston and Los Angeles. If your goal is to have a high profile job in the finance sector, you may want to consider moving to one of these metropolitan areas. Of course, regional banking and finance career paths exist outside of these areas, so it’s worth looking at company websites to explore opportunities.
Banking and finance career paths can vary, but some of the main pathways include banking, stock broking and investing, and insurance. Depending on the organization, the work could be business to business or business to consumer. Banking for consumers can consist of saving personal finances, retirement funds, and investing. Financial investments involves a heavy amount of attention to the stock market, economic trends, and larger amounts of money. Insurance protects consumers or businesses from financial losses. Insurance involves lots of fine-print policy understanding and laws related to the field of insurance.
Banks offer several entry-level positions, such as teller or associate banker, that don’t require four-year degrees. Many of the national corporate banks also offer valuable benefits, such as tuition reimbursement, schooling opportunities, and training so that you can learn and move up through the bank’s hierarchy. If working for a large banking corporation is undesirable, try looking into a more regional bank or credit union, which tend to be smaller, more team and culture-oriented, and often do more innovative work.
“Wall Street” often refers to the very large industry of brokers, traders, stock markets, and investments. There aren’t very many entry-level jobs and this industry has a reputation for relying on personal relationships and networking; jobs can be very competitive but can pay extremely well. If you have a desire to work for a large investment group, hedge fund, or similar organization, acquiring a 4-year degree in a finance discipline should be your first step. Then, work in an internship position or entry-level job that will get you connected to the right people. Build a network, establish a good reputation, and more opportunities will arise.
Day-trading is a term that refers to the process of buying and selling securities very frequently, in an attempt to earn short-term profits on smart investment decisions. This is very risky, but it is a great way to understand markets and build a passion for investing and the finance world. If you have enough savings and want to try day-trading, you can set up your own trading account on sites like E-Trade, Charles Schwab, and RobinHood. Before you start trading, it is a good idea to connect with other beginning investors who can help get you started. Note, although some very astute investors can make a living day-trading, it is not for the faint of heart – there are more stories of people losing their livelihoods than there are success stories.
Private equity, mergers and acquisitions, and venture capital are other lucrative finance industries. People in these industries make money by buying or investing in other companies and making a profit when that company is sold. Like Wall Street, these companies are difficult to get into. If you can land an entry level position, more opportunities will come as you network and meet people.
Insurance companies provide protection for policyholders (customers) against potential financial losses. However, in the past few decades, insurance companies have expanded into other financial services centered on savings, asset protection, and retirement planning. Insurance is one of the easiest branches of finance to get into: many local insurance companies offer internships or entry-level positions that include system or platform training, product knowledge, and state licensing for property, casualty, and health and life insurance. Taking on such an internship will allow workers to join the insurance agency as an independent insurance agent or agency owner, depending on the structure of the company. College degrees are normally not required, but any courses or credits associated with business, accounting, computers, marketing, psychology and communications will all help in the long run.
Hear from a real life investor in this video below!
Banking and Finance Sub-Categories
Insurance
Investments and Stock Broking