“How do you answer the question ‘why investment banking’?”
That’s probably the question that I get the most frequently from students aspiring to break into IB.
And I’m very glad that they ask…
First, because 9 out 10 interviewees can’t give an intelligent answer to this question. Even bright candidates from elite target universities with pristine GPAs fail to answer this question so, so often…
Second, because you will get this question in every single interview. Which means you absolutely must get this question right if you want to secure offers at top investment banks.
Most articles you can find online on this subject are garbage. So I decided to write an article on that to help you prepare an actually great answer to the question “why investment banking?”
Let’s get to it.
The dumbest thing you can do here is to reply with something generic. Something that 90% of candidates are saying just because they “saw it in an article online”, or “heard a friend saying it”.
Trust me. If everybody is saying the exact thing, that thing has no value. What is available in short supply is valuable. What is abundant is not. Basic supply and demand.
Here are some common BS, generic answer that you need to avoid like the black pest:
If you avoid these stereotypical answers, you will already fare better than 90% of candidates out there.
It’s not because these answers are wrong. In fact, some of these may be genuinely true. But these answers will not perform well in interviews, because they are either too generic, not believable enough, or just don’t make any sense.
Everybody with ambition wants to work smart, talented and driven people. And these people can not only be found in investment banking, but in other sectors as well. Same thing for the answer “I want to work in a fast-paced environment”.
For those who say they want to “learn”, then why don’t you just stay at uni until you’re 32? That way, you’ll learn a lot!
Same remarks apply to all of these BS answers that you don’t truly believe in when you’re saying them. And guess what? Recruiters won’t believe you either… Welcome to the real world.
With that being said, let’s see what you can do to prepare a great answer to this question.
This is a critical rule that not only applies to the “why investment banking” question, but to interviews in general: stories are significantly more effective than general statements to make an impact on your interviewer.
Read this key rule twice if you need to.
There is a reason why so many famous ads are based on stories. Humans have been using stories to convey important messages for thousands of years. Our brain is wired to prefer a strong, vivid story over a bland succession of facts.
Think about one of the most famous and successful Coca Cola ads ever, “Happiness starts with a smile”. In this ad, you see a man in the middle of a metro train full of people who all look depressed.
Suddenly, this man starts laughing uncontrollably while looking at his tablet. Initially, people around him look confused. But his laugh is so contagious that people can’t help but smirk, and within seconds, every person in the train is laughing out loud.
Before you know it, a team of people with red t-shirts start distributing cans of Coca Cola, among the general laughing hysteria of the train…
The message of this story is very clear: Coca Cola brings happiness.
Now, imagine if this ad, instead of telling an emotionally-charged, highly compelling story, was telling you about the “nutritional composition” of the beverage, its pleasant sweet taste, its nice packaging, to convince you that you and your friends will greatly enjoy a can of Coke.
Would you get the same message?
Likely not. You probably wouldn’t even pay attention to the ad.
Well, that’s the same thing in interviews: if you are not using powerful stories to convey your message, people won’t really pay attention.
The best way to capture and retain the attention of recruiters is to tell stories. Great stories.
People love to listen to stories, so if you encapsulate your message into a story, the “pill will pass more easily”.
And that’s exactly what you should do to answer the question “Why investment banking”: prepare a great story.
What I call an origin story is a story that created your interest in investment banking in the first place. It can be an event you’ve attended, a person you’ve met, a conversation you’ve heard, or any other event that happened which triggered an envy to work in investment banking.
The more specific the story, the better. The best stories are the ones that are highly personal (because they are unique to you) and which make sense (people believe you 100% when you’re sharing these stories).
These origin stories can revolve around:
I’m just giving a few examples here. There are countless ways you can approach this exercise.
Below, I give some examples of great origin stories used to answer the question “Why investment banking”. Those are only meant to give you a precise idea of what works. Do not use these answers word for word, because they are not tailored to your specific case.
“During an alumni networking event organized by your university last year, you met a Managing Director working in the M&A team of Jefferies in London.
During your conversation, he told you the story of a major $11bn M&A deal in the TMT space that happened last year between X Company and Y Company.
He ran you through the entire deal process, from fine-tuning the equity story of the seller, to establishing a range of potential valuations, to negotiating with various stakeholders to secure the best possible selling price, to managing the day-to-day interactions with clients, lawyers, and PR agencies to make sure the deal runs smoothly. You were amazed by the phenomenal complexity of the deal.
You didn’t know that there was so much “going on” in the backstage of the transaction. And you found beauty in the fact that all the moving parts need to be neatly assembled for the whole operation to work, a bit like a plane that can’t safely fly if one piece is dysfunctional.
This story really inspired you, and now you would like to have the chance to work on deals of this kind by being an active member of an investment banking team.”
“During an M&A competition you participated in last year, you had to build an M&A case study on a fictive merger transaction between two luxury hotel companies.
You partnered with two of your friends, and for three weeks in a row, aside from classes, you worked every day on refining your case study, building valuation analyses, strategic assessments, sensitivity analyses, and due diligence on these two companies.
Once the case study was completed, you sent it to a jury, and they decided to invite you and your team to the final round of the competition, during which the selected participants had to present their case study in front of another jury composed of senior bankers working at leading investment banks.
You presented your case study as best as you could, and your team was ranked 2nd out of 458 participants. It was one of the most exciting and intellectually stimulating experiences of your life, and since you enjoyed it so much, you would like to rediscover this feeling of excitement by working in M&A.”
“Last year, you worked as an intern in the Investor Relations team of a public company that recently went through a very large merger.
During the operation, you liaised with the M&A team of an investment bank called XYZ, and you were invited to participate in a business meeting during which senior investment bankers discussed the strategic rationale of the transaction, the potential synergies that could be unlocked, the impact it could have on earnings using several hypotheses.
You found this strategic meeting absolutely fascinating, and based on that vivid and pleasant memory, you decided to gain some experience in Investment Banking to explore this path (this type of answer works best if you have no experience in IB and you’re a relatively young student who is in a “discovery mode”.
I don’t recommend using this type of catalyst to justify your interest in IB if you’ve got 2-3 internships in fields very close to IB already, as it may sound a bit naïve from the perspective of the recruiter.)”
Your origin story obviously needs to be adapted to your background. If you are a student with zero experience in finance, you will probably use a story based on a mentor you’ve met or a leadership experience you had.
You need to think about what makes the most sense for you, if you want interviewers to believe you and give you some credit.
In this article, I gave you a few tips to answer the “Why investment banking” question, which is a very important one. If you want to get practical examples of high-performing answers for over 125 common investment banking interview questions, check out this page.
For each interview question, we tell you exactly what your thinking process should be, and what types of answers are guaranteed to impress the recruiters. Learn more on this page.
Aurelian Tran is the founder of Alpha Lane and an ex-Goldman Sachs analyst who has spent 4+ years working in the investment banking industry.
He founded Alpha Lane to help students and young professionals achieve their highest professional ambitions, by securing offers at top-tier financial institutions.
@2022 Alpha-Lane. All rights reserved.
