Investment Banking vs. Corporate Finance: What's the Difference? (2024)

FAQs

Investment Banking vs. Corporate Finance: What's the Difference? ›

Corporate finance and investment banking are very different in terms of their aims and purpose. Investment banking helps businesses raise capital in a variety of ways, such as mergers and acquisitions, as well as selling securities, while corporate finance helps organizations acquire funding and manage their assets.

Investment banking grows a company, while corporate finance manages a company. A corporate finance professional deals with day-to-day financial operations and handles short- and long-term business goals. An investment banker focuses on raising capital.

Corporate finance is a subset of the field of finance. It concerns proper budgeting, raising capital to meet company needs and objectives with debt and/or equity, and the efficient management of a company's current assets and liabilities. The various jobs in corporate finance can pay well.

Corporate finance professionals focus on internal risks related to the company's operations, while investment analysts evaluate external risks associated with investment opportunities. By integrating risk management practices, companies can mitigate overall financial risk.

Corporate finance may not be as “prestigious” as investment banking, and it doesn't give you as many exit opportunities…

If you enjoy working with numbers and you have strong analytical skills, then corporate finance could be the career for you. Those who are good problem-solvers and have a strong attention to detail do well in the area.

The highest position in a finance company is often the chief executive officer (CEO) or managing director. These executives are responsible for the overall management and strategic direction of the company, including its financial operations.

Corporate finance is split into three sub-sections: capital budgeting, capital structure, and working capital management. Capital budgeting operates over the long term.

For example, an analyst in investment banking can earn as much as $70,000 as their base salary. As an associate, your basic compensation would be $100,000. A Vice President would accumulate $250,000. Entry-level jobs in the corporate banking sector will pay you $30,000 to $40,000 per year.

Its primary goal is to maximize shareholder value while striking a balance between risk and profitability. It entails long- and short-term financial planning and implementing various strategies, capital investment, and tax considerations.

Can you go from corporate finance to investment banking? ›

Some students graduate, accept a role that's related to IB, such as a Big 4 valuation job, corporate banking, or corporate finance, and then move into IB from there. The probability of making this move depends heavily on market conditions and the nature of your full-time job.

The CPA is great if you want to rise up the finance department at a corporate business and ultimately become the CFO, or if you want to rise up the ranks at a public accounting firm. The CFA credential, by contrast, is great if you want to work at a bank and, in particular, in investment management or equity research.

Although it is not the job that holds the most prestige in the world of finance, corporate banking is an underrated career.

The "Big 4" refers to the four largest accounting firms and includes Deloitte, PwC, KPMG, and EY. All four companies provide audit, assurance, consulting, financial advisory, risk management, and tax compliance services. Deloitte. "Deloitte Ranked 6th on World's Best Workplaces 2023."

If you want to get a graduate degree, your options include earning a master's in business administration (MBA) or a master's degree in another business-related area, such as management, finance, business analytics, marketing, or entrepreneurship.

Finance degrees will often cover more basic mathematical concepts such as algebra and statistics, as well as more industry-specific math courses such as probability and business mathematics.

Key Takeaways. Retail banks make money by charging fees (for checking accounts, credit or debit cards, and other services) and interest income from loans. Investment banking is a subset of commercial or corporate banking that focuses on institutional clients instead of individuals.

The critical difference between the two types of banks is who they provide services to. Commercial banks accept deposits, make loans, safeguard assets, and work with many small and medium-sized businesses and consumers. Investment banks provide services to large corporations and institutional investors.

Corporate Banking: An Overview. Retail banking is a bank's services that deal directly with consumers, while corporate banking is the part of the banking industry that serves business or corporate customers.

Finance degrees are generally considered to be challenging. In a program like this, students gain exposure to new concepts, from financial lingo to mathematical problems, so there can be a learning curve.