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Investment Banking

Just because they’re not as high profile as the front office characters – the teams that actively generate money for the clients and the bank itself – it doesn’t mean that what goes on in the rest an investment bank’s infrastructure isn’t important. Indeed, what goes on behind the scenes is essential to ensure a bank doesn’t run itself into financial problems and other issues to do with security or reputation for instance that are simply too big for it to handle.   

Let’s take a little look at the infrastructure of an investment bank beyond the front office…

Middle office: the voice of reason

In investment banking, the middle office usually consists of risk management and research departments, as well as some elements of technology.

Risk analysts and managers work closely with front office teams to feed them their results on various aspects of risk analysis relating to various asset classes and financial markets. This information helps the decision makers to make investments with risk mitigated as much as possible. The also manage risk in terms of compliance, ensuring what the bank does is on the right side of legislation and industry standards. A bank’s legal team will also form part of the middle office.

Developers and some types of quantitative analysts will also work on the creation and maintenance of software and applications used by the traders and brokers in the front office. You’ll even find some developers on the trading floor itself.

Financial control is also part of the middle office. This is essentially the accounting department for the bank; preparing the bank’s financial statements for reporting to industry regulators etc.

Back office: the engine room

The front office brings in the bacon, so to speak, and the back office teams ensure that transactions are carried out successfully and on time. There’s a lot more to it than you might think!

The back office is namely a department referred to as ‘operations’. This includes all of the services and duties that must be carried out when trades are made by the front office: clearing and settlement. These are mostly administrative roles, which play a vital part in the overall functioning of the bank – and the world of trading overall, for that matter! There are also opportunities to work on projects, creating new processes and refining or automating older ones. They offer a chance to work with various different asset classes, and a global dynamic to work – global investment banks will coordinate their operations teams worldwide.

It’s not just about clearing and settlement services either. A bank is, after all, a business like any other, with staff to take care of, an image and brand to mould and promote, and a need to source the very best talent for their roles, from graduate intake up to the most senior roles. This is where HR and marketing comes in, running recruitment, ensuring standards are upheld across the business, handling disciplinary issues when necessary, organising benefits and rewards for existing employees and generally acting as the glue to keep everything in the bank together.

Technology forms part of the back office too. A modern bank is nothing without fully functioning systems and hardware, so experts are always on hand for maintenance and to fix problems whenever they arise.