Commercial awareness in investment banking and investment management is primarily about understanding the business structure of an organisation and how the organisation fits into the business world. This involves:
- Understanding the purpose of a role, how it fits into a department, and how that department fits into the organisation as a whole
- Understanding how an organisation interacts with others within the industry
- Having a general understanding of the organisation and the function it serves
- Developing an awareness of the bank or firm’s commercial priorities, what makes it successful and who its main competitors are
- Knowing who the bank or firm’s clients are and which industry sectors they belong to
- Being able to identify factors and events in the global economy that could impact the organisation’s overall business performance.
Why is it important that graduates interested in banking and investment have commercial awareness?
Having commercial awareness proves to employers that you have a genuine interest in investment banking or investment management, and that you have carefully considered the role, organisation and sector you are applying to. For instance, Baillie Gifford has stressed how important it is for graduates to give good reasons for applying and for wanting to pursue a career in investment management. You’ll be expected to highlight aspects of the industry, business or graduate programme that correspond with your interests or career aspirations throughout the recruitment process, but you won’t be able to do this without commercial awareness.
How will your commercial awareness be tested during the recruitment process?
Banking and investment recruiters will first test your commercial awareness using the application form, which often includes a CV and covering letter. They do this through: questions asked on application forms; the level of experience and interest visible on your CV; and the specific reasons you have given for applying.
Most application forms will include questions such as ‘Why do you want to work for us?’ and ‘What makes you suited to the role?’ Employers expect you to support your answers using knowledge of the company, the sector, what makes their organisation stand out from its competitors, and what the role you have applied for will entail. You can read more advice on how to approach this style of question.
Your commercial awareness will also be tested at interview – face to face, over the phone or on skype – as well as at assessment centres. For example:
- Investment management firms such as Fidelity may ask: ‘What current financial news story interests you, and why?’
- A common request is to ‘describe a company you think is doing well/badly and explain why you think this is so.’
- Credit Suisse has been known to ask: ‘If you had to choose one place, where would you invest your money right now?’
- Bank of America Merrill Lynch has previously asked: ‘What are the biggest issues facing BAML today?’
How you can improve your commercial awareness
Gaining some experience in the sector through a summer internship, spring insight programme, or even a one-day taster session is a great way to gain some commercial insight. You can read more of our advice about the investment and banking work experience pipeline. Many companies also give talks and run events through university fairs, societies or departments; this is a good way to learn from the professionals, meet them in person and even ask your own questions.
Read, watch and listen to the many readily available resources. Particular financial online/offline publications – such as Reuters, the Wall Street Journal, the Financial Times and City A.M. – or the business sections of newspapers including The Guardian and The Daily Telegraph will help you to deepen your knowledge of the banking and investment management sectors.
It can also be useful to check the online archives of the employer you are applying to, where they often publish their own surveys and reports. This will give you an insight into the work undertaken by the company, its presentation style, and specific areas it has been interested in.
If you find it difficult to absorb the information solely by reading you can try watching Bloomberg TV, which is a network dedicated to broadcasting the latest news on business and markets. It may be useful to download and listen to some of BBC Radio 4’s podcasts; programmes which focus on business include The Money Box, The Bottom Line and In Business.
Follow the social media accounts of the most relevant banks, companies, industry magazines and notable journalists – you never know when a tweet will flag up new issues or challenge your established opinion and make you think!
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