The financial meltdown of 2008 has prompted a subtle change in the recruitment processes of the investment banks and in the way business schools respond to the requirements of the market.
The basic skills required by the financial world remain the same. But both the banks and the schools are focusing more closely on the “softer” skills of client empathy and social responsibility. Whether this makes a difference to banks’ performance and reputation over the longer term remains to be seen.
At a practical level, a career in securitisation, trading and mergers and acquisitions – all areas seen as contributing to the meltdown – have less appeal to many business school students. “Now we see people interested in other areas of finance such as private banking and investment management,” says Sarah Juillet, director of postgraduate careers and the MBA programme at City University’s Cass Business School.
“They are more aware of the negatives around trading and M&A, and the alternatives have increased in popularity.” Cass is about to launch a masters in wealth management qualification, a subject previously available only as an elective element in a broader masters course.
Faye Woodhead, head of graduate governance, planning and strategy at Deutsche Bank, agrees that there has been a shift in aspirations, encouraged in part by the schools’ keenness to maximise students’ job prospects. She acknowledges the challenge this poses for Europe’s investment banks.
“There has been a change in MBA recruitment since 2008 and especially in the past couple of years,” says Ms Woodhead. “There has been a decrease in interest in the pure sales and trading roles on the part of students. Historically, people would focus on one industry in their career search.
“Now the range of options is much wider and there is a move to hedge funds, private equity, technology firms and corporates as well as investment banking and consultancy.”
She adds: “The culture is changing. We encourage our hires to think creatively about finding solutions for clients in a risk-aware environment. Client-centricity is key. The financial structuring and trading roles are still there but we are looking for an ability to get in front of clients and build relationships.”
Susan Miller, MBA programme director at Durham University Business School, says: “It is the personal qualities and skills that have been highlighted by recent events. It is not just about understanding the numbers. It is about leadership and taking a stand.”
A new module, “sustainability, ethics and change”, is to be introduced into the curriculum from September, bringing together issues treated separately in other courses.
“It focuses on the personal and professional skills for dealing with complex situations,” says Prof Miller. “It will help people understand their strengths and weaknesses. The investment banks recognise that these issues need to be prioritised.”
In contrast with MBA students, those taking a masters of finance follow a shorter, more focused course of study more likely to lead to a career in banking and financial services.
Despite lay-offs, Thomas Renstrom, director of MSc programmes at Durham University Business School, says there is still strong demand for graduates with this qualification. Applications from prospective students are up and the school has introduced a new masters in economics degree.
The nature of the course has meant there has been less pressure for change, he explains. “If anything this crisis has shown that it is very important to have a good financial and economic analytical ability. We structure our programmes around research, analysis and methodology and that is less likely to change in the wake of a crisis. If we train our students to have good analytical ability they will be able to function in any environment.”
The meltdown has actually created opportunities for students who are able to understand risk and meet the tougher regulation being put in place or to act as regulators themselves, Dr Renstrom says. “If this were more of a vocational degree then it would be more likely to change. But if anything it looks to be going the other way.”
A problem for investment banks has been to retain and where possible improve their appeal. “They are now targeting potential recruits earlier,” says Ms Juillet, who worked as a recruiter for Lehman Brothers in the boom years. “Banks that used to run a summer internship programme for undergraduates in their penultimate year now run courses for sixth-formers or students in their first year of university.
“Because of the negative coverage, they want to educate people coming through the school system as to what banking can offer as a career. More than ever banks are recruiting people who have been on their internship programmes. It is ‘try before you buy’.”
There appears to be no indication the crisis has reduced the banks’ need for good quality business school graduates; if anything the opposite. But both banks and the schools recognise a need for recruits to have what Deutsche Bank calls “sensitivity to society in the way we operate”. What this will mean in practice is as yet unclear.