InsideIIM conducted a live chat with Dhiraj Bajaj, Director and India Head – Financial Institutions – Transaction Banking, Bank of America. The idea was to get a perspective on the banking industry and careers in finance. In an extremely informative and fruitful session, Dhiraj Bajaj patiently answered all kinds of queries on banking and careers from the MBA students and B school aspirants.
For those of you who don't have the time to read the entire transcript, we are summarizing some of his best responses to the questions posed by our users....
Aruna- What do you think will be the impact of technology in this industry? Don't you think a lot of the analytical work bankers do can be automated? How can people deal with this disruption?
Dhiraj- Technology has been the game changer as also the differentiator for banks (globally) in the last 10 years. It may automate analytics, but you would still need experienced analysts to devise scenarios for running the analytics. I see technology enhancements as an opportunity for bankers; advisable to keep yourself updated to ensure that you do not become redundant in a changing environment.
Akshay Modi from IIFT Delhi- What advice would you give to students as we head out for our summer internships in various finance roles?
Dhiraj- If you join a bank, make sure you get a good understanding around all areas of banking in addition to your specific project. Look beyond your project objectives and try and understand the overall organizational objective, that would be driven from the work done in your project. Try and focus on the organizations core goals in order to assess if it will fit into your future goals.
Deepa Shekhar- Dear sir, what are your views on bitcoin? As a payment and money-transfer system with practically zero transaction fees, don't you think it has great potential to disrupt the existing money transfer business which charges 2-3% transaction fees? How will banks respond to bitcoin?
Dhiraj- Too nascent to comment whether bitcoins is game changer. What we need to keep in mind - there is no free lunch hence banks charge to provide the services and infrastructure for remittances; compliance costs on money transfer has risen exponentially and hence hard to believe that a zero cost x-border solution will exist in the near future, bitcoin or no bitcoin.
Rohit Baheti- Sir, from a transaction banking perspective - how does e-commerce change the game? How are banks dealing with the new eco-system?
Dhiraj- E-commerce is a boon for retail and commercial banks. It aims to develop a section of the population that is net savvy; the same set of people avoid branch banking, rely on online banking and hugely reduce transaction banking costs for banks. Brick and Mortar banking will remain, but e-banking will help ensure that fixed costs for banks do not rise exponentially with transaction volumes.
Varaprasad- We generally observe that there will be a certain amount of cultural difference from one organization to other. For entry level candidates, it might be easy to get absorbed and molded as per the culture of their organization. As future managers, I would like to know how difficult would it be for an experienced candidate from the organizational culture aspect in switching the jobs.
Dhiraj- Whenever you change a job, irrespective at what level you join, you start building on your credibility in that organization from scratch. To be successful, it is very important that you quickly imbibe the core values and strategic goals of the new organization in order to understand its DNA. Always advisable to avoid references to previous employer and try and change things just for the sake of it. You need to win the support of your peers and subordinates before echoing any changes in the new organization.
Team InsideIIM What are your expectations from fresh MBAs/CAs/CFAs who join from campus? Where do you think they should work on the most?
Dhiraj- Given that within banking there are multiple career options, it is important that a newcomer to the bank quickly frames up his/her mind on possible long term career goals within the first 12-24 months in the organization. Akin to Bollywood movies (once a villain, always a villain), complete role change between different lines of business (whether within or outside the organization) does not happen 7-10 years into your career and you may end up with a role that does not excite you in the long run. Hence, decide asap on your long term goals in the organization, before it gets too late.
Below is the transcript of the entire chat.
Rohit Baheti- Hello Sir, I'm Rohit and wish to pursue a career in Banking. How useful is CFA? Do you value such a degree?
Dhiraj- Hi Rohit, CFA is particularly important if you seek a career in wealth management or global markets. CFA gives you a great insight into asset valuation models and investment management.
AshJ- Hello sir, first of all thanks a lot for giving your valuable time to us. My question : I am an engineering graduate and my field of interest is finance markets . I graduated in 2013 . I also hold a CFA level1 degree . My college CGPA was 7.01 . Can you tell me what is actually expected(curriculum as well as non-curriculum wise) out of an undergraduate for entry level positions in banking.
Dhiraj- In order to get into basic branch/retail banking, your qualifications will suffice. For an enhanced corporate banking/investment banking profile a minimum post grad (CA/MBA) from a reputed institute is a pre-requisite.
AshJ- I agree Dhiraj but i have seen people from IITs getting into such roles without an MBA ...roles like Equity analyst
Dhiraj- That has been a new trend, however from a long term career perspective it may lead to stagnation with a particular unit/job.
Rajaraman from IIFT, Delhi - Hello Sir, This is Rajaraman from IIFT, Delhi. From my interactions with management students I observe that they are broadly interested in either Investment banking or Treasury roles and hardly a few of them think of anything beyond these. Could you please elaborate on other areas in BFSI which provide opportunities for management students?
Dhiraj- Apart from IB & markets, there are opportunities in corporate banking, transaction banking, wealth management, consumer banking, credit risk and operations.
Rajaraman : Thank you for your reply Sir. I would also like to know what is the general career progression for a B-school graduate who enters into the Credit risk domain. What is the entry level role and where can he see himself in about 10-15 years in that domain? Could you elaborate on the kind of work he/she would be expected to perform?
Dhiraj- An entry level position in credit risk is that of an analyst that supports the risk managers. Depending on whether the person wants to remain in the risk chain or move into a frontline coverage role, the career could lead to a Risk Head position or an Industry lead position in corporate banking in 10-15 years. If one is mobile, he/she could also look at a regional role in SG/HK in Risk.
Deepa Shekhar- Dear sir, do you think the long working hours in investment banking are just a fad? How many of those hours are spent in productive work? Doesn't it spoil the atmosphere for everyone else? How would you as a leader set the tone for the rest of your team in a banking environment?
Dhiraj- There could be long hours in any function including investment banking. Long hours at times depends on organizational culture. A leader plays a large role in defining his/her own work life balance as also the work/life balance of his teams.
Aruna- What do you think will be the impact of technology in this industry? Don't you think a lot of the analytical work bankers do can be automated? How can people deal with this disruption?
Dhiraj- Technology has been the game changer as also the differentiator for banks (globally) in the last 10 years. It may automate analytics, but you would still need experienced analysts to devise scenarios for running the analytics. I see technology enhancements as an opportunity for bankers; advisable to keep yourself updated to ensure that you do not become redundant in a changing environment.
SAgarwal- Dear Sir, On the transaction-banking front, there is a difference in fee structure in each state- for example in Maharashtra the cost to register and other government costs are higher so they may eat into profits. If you increase transaction price to client, competitor may charge less and take over- what are your opinions on this?
Dhiraj- Could you elaborate on your question please?
SAgarwal- Sir,To elaborate with a case- If you charge 1-2% as transaction fees to client and government costs say in Maharashtra is high. Then you end up getting 25-40 bps. But in Karnataka due to lower government costs you will get 50-75 bps. So how do you overcome this variability and competitive threat.
Dhiraj- Efficient tax planning ensures that business moves to geographies that are most tax efficient. Unless there is no option available, banks and corporates move business agreements to states that offer the best tax rate (as taxes are an integral part of project/transaction cost). I hope that answers your question.
Sourav, IIFT Delhi- Hello Sir, I am Sourav from IIFT Delhi, currently pursuing MBA. I wanted to ask that are certifications like CFA absolutely necessary to enter into roles in Equity Research, Global Markets and Treasury?
Dhiraj- Not absolutely necessary, but important from a long term career growth perspective. CFA imparts very practical and current market linked curriculum and hence it becomes that much more easier to adapt to a new job in treasury/global markets in a bank
Amarjeet from IIFT Delhi- Dear Sir-I'm Amarjeet from IIFT Delhi. While I intend to major in Finance, I constantly hear that IB sector post 2008 will never be the same in terms of autonomy, innovation and returns-on account of stringent laws that have been mooted as well as general disenchantment among people (for ex. Occupy Wall Street Movement) How do you see opportunities for a fulfilling career in finance in near future?
Dhiraj- Regulations are part of life in banking and have always been there since inception. The 2008 crises identified areas where additional controls were required. Banks continue to be profitable although compliance costs will go up.
Ankit Dugar- I would like to know what exactly constitutes a treasury department and what is the difference between in-house treasury management (say a bank) and treasury management by a specialist for a client?
Dhiraj- both are similar concepts. In a bank (unlike manufacturing) money is our raw material. A bank treasury is constantly trying to match assets and liabilities across tenures on a daily basis. Treasury management for corporates is all about working capital management (managing receipts and payments and ensuring adequate short term and long term funding to run the enterprise)
Ankit- Thank you for the reply sir. A quick follow up question: what is the profile of people generally hired for treasury department? What sort of a role is typical offered at entry level (say after an MBA)?
Dhiraj- Entry level jobs in treasury are in market operations for 2-3 years. Need to know how a car is built before you start selling one. Depending on one's performance, it takes 3-7 years to get into a dealing room job (whether it is trading or client sales).
Akshay Modi from IIFT Delhi- Good afternoon Sir. I am Akshay Modi from the first year batch of IIFT Delhi. What advice would you give to students as we head out for our summer internships in various finance roles? How can we maximise our learning during this period and make a mark at the same time? Thank you.
Dhiraj- If you join a bank, make sure you get a good understanding around all areas of banking in addition to your specific project. Look beyond your project objectives and try and understand the overall organizational objective, that would be driven from the work done in your project. Try and focus on the organizations core goals in order to assess if it will fit into your future goals.
Vikash- Hello Sir, what would you suggest to a fin enthusiast who is stuck in a back office finance job in a Indian financial KPO for 2 years and wants to move to more finance specific roles. I mean what steps should he take to create a better chance for getting into a respectable role. Will CFA or FRM help?
Dhiraj- A CFA would definitely help. It is important to keep looking out for front end/business roles. Revenue generating / profit centers are always the most rewarded ones.
Deepa Shekhar- Dear Sir, how do you think the new banking licenses given out by the RBI will play out? Will it lead to a huge increase in opportunities in banking for MBA professionals? What should one do to capitalize on this? What will be the skills required to thrive in banks that are in setting-up mode?
Dhiraj- The new licenses will increase competition in a crowded market; will open up opportunities for (old) bankers like us as well as new MBAs. The benefit of a start-up is that you do not rely on legacy issues, although building things from scratch may be frustrating and time consuming. Competing in a cut-throat banking environment where battles are won on pricing is reality.
In new set-ups, knowledge about basics of banking operations & regulatory environment is the key. You need to get your procedures in place before you get into business; there is no room for lapses when you deal with other people’s money. First couple of years is spent in building infrastructure and procedures rather than focus on revenues and profits
Sourav- I would also like to know sir that how difficult is it to switch from a risk management role to an IB role?
Dhiraj- Depends on stage of your career. Mobility within units is normal in the first 5-7 years of your career post which you need to become a specialist, thereby restricting mobility between different lines of business. As you move into leadership roles, it is important that you chose an area where you would specialize from a career perspective.
Sourav- Thank you for your reply sir. Just one more question. I have a work experience of around 2.5 years in the IT industry. Does having work experience of such tenure hamper the chances of entry level jobs at IB or corporate finance? Please throw some light on this aspect.
Suhani Doshi from IIM K- Sir, pre-MBA I have had 9 months experience in Corporate Banking. Post-MBA, however do not see enough opportunities in this field from my campus (IIM-K) and may be forced to take a job in a non-banking area. I eventually want to get into banking, would my pre-MBA experience give me leverage even though it has been for a short duration and my various jumps and changes into different fields?
Dhiraj- Yes, your pre-MBA experience in corporate banking will always help, provided you look for a career move within 12-24 months. Generally, it gets difficult to move from industry (corporates) to banks if you have spent over 24 months; however, the reverse may not be true. A number of bankers move to industry (corporates) and back during various stages of their career.
Rohit Baheti- Sir, from a transaction banking perspective - how does e-commerce change the game? How are banks dealing with the new eco-system?
Dhiraj- E-commerce is a boon for retail and commercial banks. It aims to develop a section of the population that is net savvy; the same set of people avoid branch banking, rely on online banking and hugely reduce transaction banking costs for banks. Brick and Mortar banking will remain, but e-banking will help ensure that fixed costs for banks do not rise exponentially with transaction volumes.
Varaprasad, IIFT Delhi- Hello sir. I am Varaprasad, presently pursuing MBA from IIFT Delhi. We generally observe that there will be a certain amount of cultural difference from one organization to other. For entry level candidates, it might be easy to get absorbed and molded as per the culture of their organization. As future managers, I would like to know how difficult would it be for an experienced candidate from the organizational culture aspect in switching the jobs. I would like to hear your suggestions on this. Thank you.
Dhiraj- Whenever you change a job, irrespective at what level you join, you start building on your credibility in that organization from scratch. To be successful, it is very important that you quickly imbibe the core values and strategic goals of the new organization in order to understand its DNA. Always advisable to avoid references to previous employer and try and change things just for the sake of it. You need to win the support of your peers and subordinates before echoing any changes in the new organization.
Deepa Shekhar- Dear sir, what are your views on bitcoin? As a payment and money-transfer system with practically zero transaction fees, don't you think it has great potential to disrupt the existing money transfer business which charges 2-3% transaction fees? How will banks respond to bitcoin?
Dhiraj- Too nascent to comment whether bitcoins is game changer. What we need to keep in mind - there is no free lunch hence banks charge to provide the services and infrastructure for remittances; compliance costs on money transfer has risen exponentially and hence hard to believe that a zero cost x-border solution will exist in the near future, bitcoin or no bitcoin.
Team InsideIIM- One question from our side Sir - What are your expectations from fresh MBAs/CAs/CFAs who join from campus? Where do you think they should work on the most?
Dhiraj- Given that within banking there are multiple career options, it is important that a newcomer to the bank quickly frames up his/her mind on possible long term career goals within the first 12-24 months in the organization. Akin to Bollywood movies (once a villain, always a villain), complete role change between different lines of business (whether within or outside the organization) does not happen 7-10 years into your career and you may end up with a role that does not excite you in the long run. Hence, decide asap on your long term goals in the organization, before it gets too late.
Suhani Doshi from IIMK- Most of the jobs taken by MBA' s in the finance/banking field should ideally be extremely suitable for CA's , but we see that this is hardly the case. In your experience over the last 15 years, who have performed better- CA's vs MBA's , and why so ?
Dhiraj- It is more person dependant rather than CA or MBA. I am a CA myself (not an MBA). Typically, organisations believed that CA are better suited for finance, operations and control functions and MBA's make better candidates for frontline/client facing roles. That thought process has changed considerably. A large number of CAs today lead global markets/corp & investment banking roles. Given the eye for detail, CAs also dominate roles when it comes to credit and ops risk management.
Last note from Dhiraj
I guess we are past the hour and I think that I have managed to answer all the questions. Hopefully you found the responses useful. Thank you for the opportunity; I personally found the interaction very useful. If you need to reach out to me, my email ID is updated on my LinkedIn profile. Thank you.
Note from Team InsideIIM- We would like to thank Dhiraj for his time. We hope we didn't take up too much of his Sunday time with family. He has answered all questions patiently and in detail. We are sure it will be very useful for all Finance career seekers!
LIVE Chat Transcript with the CMO of Mahindra Holidays, Deepali Naair can be found
here
