Why Investment Banking? (2024)

The “Why Investment Banking?” interview question

You’re almost guaranteed to be asked this question in an investment banking interview. Of all the jobs you could have out of university, why investment banking?

The key is to quickly demonstrate that you’re smart, that you understand what the job entails, and,having a full view of what’s required, you still really want to do it!

At the end of the day, investment banks want Analysts/Associates who are –

1. Smart enough to do good work;
2. Can handle the hours;
3. And won’t quit.

This guide will show you how to demonstrate the above three qualities in a concise way.

An example answer to the “Why Investment Banking?” question

Here is an example of how to answer the question concisely:

I want to work in investment banking because it’s the fastest way to learn financial modeling, valuation, Excel, and to understand the nature of large corporate transactions. I’m aware that the job has a strict hierarchy and very long hours, but the opportunity to gain such valuable skills and be exposed to high profile transactions so early in my career is the most exciting opportunity I can think of.

The strong points from this answer include:

• Awareness of the skills required for the job (a lot of time spent in Excel, Word, and PowerPoint)
• Awareness of the hierarchy (senior bankers will lean hard on junior bankers and all work rolls downhill)
• Awareness of the long hours (80+ hours per week)
• Excitement about a steep learning curve and exposure to high profile deals

Positive reasons why you want to go intoinvestment banking

Valuation & financial modeling work

Investment banking offers the opportunity to become an expert at building large, complex financial models at the earliest stage of your career. While bankers aren’t necessarily great investors, they do spend a lot of time on valuation work, and this can be an excellent way to start your career.

Exposure to high profile transactions

Most of what bankers work on is top secret until it’s publicly announced, and when it is finally announced, then it’s usually on the front page of the business section. If you say something to this effect,itwill likely stroke the ego of the interviewer, and it expresses a pretty compelling reason to go into the industry.

An extreme challenge and steep learning curve

If you can call out the fact that IB requires extremely long hours and you’re actually motivated by the challenge, that will go a long way toward making you an appealing job candidate. It’s helpful to draw parallels to your personal life, such as competingas an elite athlete, musician, or in some extremely challenging event (like climbing Mount Everest).

Negative reasons why you want to go into IB

Doing it for the money

Even though the money is most likely a huge motivation for you, it’s not a good idea to say that you’re motivated by how muchmoney bankersmake. It may be true, but most people find it distasteful, so avoid saying that.

Doing it as a stepping stone to something else

This may also be true, but you should avoid saying anything about ultimately wanting to get into private equity or hedge funds and thinking that IB is a great way to get here. When a company hires you, they want to think that you will stay with them.

Financial modeling

One of the top reasons that investment banking may really be the job you want is the experience and exposure to financial modeling. Analysts and Associates have the opportunity to work on building various types of financial models for important transactions, which would never happen in most other jobs straight out of university. Yes, new bankers have to do a lot of truly mundane things (like print and bind pitchbooks, make word edits, etc.), but they also get to learn one of the most sought-after skills in finance.

Screenshot from CFI’s M&A Modeling Course.

More career resources

Thank you for reading CFI’s guide to answering the “Why investment banking?” interview question! If you’re looking for a job in IB, then be sure to check out our guide on how to get a job in investment banking. It contains tips on networking, writing your cover letter and resume, and information on technical skills that are required.

Once you’re set on a job in IB, you can really ace an interview by being super strong technically. The best way to obtain the necessary expertise is through our financial modeling and valuation courses. We’ll teach you how the pros build valuation models from scratch!

More resources include:

• Investment banking interview form
• Walk me through a DCF (interview question)
• How the 3 financial statements are linked
• All career resources
• See all career resources
• See all capital markets resources