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Serious Question - Why do banks care about modelling skills? Watch

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    I am extremely confused as to why banks care about whether people know how to use excel/make financial models.

    Surely they should be looking for the smartest candidates who can pick stuff up and learn quickly rather than those who have experience in modelling (which I think is really easy for a smart person to learn).

    In my mind this means that banks end up with loads of people with finance degrees and people from LSE/Warwick (where these skills are taught) rather than the smartest people being hired.

    I wonder what people think?
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    saves money on teaching
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    Why don't these smart people just teach themselves how to make financial models if they know that banks care?
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    All banks will have their own method of doing it

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    (Original post by Shumaya)
    Why don't these smart people just teach themselves how to make financial models if they know that banks care?
    Because you have a degree to do and not enough time to learn a model inside out..
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    (Original post by shawtyb)
    saves money on teaching
    ? This is sort of what I am saying...

    Hire smart people that don't need to be taught to learn things...
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    (Original post by Sabster)
    I am extremely confused as to why banks care about whether people know how to use excel/make financial models.

    Surely they should be looking for the smartest candidates who can pick stuff up and learn quickly rather than those who have experience in modelling (which I think is really easy for a smart person to learn).

    In my mind this means that banks end up with loads of people with finance degrees and people from LSE/Warwick (where these skills are taught) rather than the smartest people being hired.

    I wonder what people think?

    To my knowledge there are no modules at LSE, which will teach you how to build financial models.
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    (Original post by Sabster)
    Because you have a degree to do and not enough time to learn a model inside out..
    learn 2 time manage, soz. key to success in banking

    in all srsness, banks take all disciplines, you don't need in-depth modelling to apply. you learn most on the job. my interviews consisted of basic valuation breakdowns, and logical questions/brain teasers like "how many windows are there in london?". i think relative to most students, i had more challenging finance related questions because i study a finance degree.

    i think those with a real interest would have done their relevant research, or it would show the bank that this guy hasn't a clue as to what they are doing.
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    (Original post by Sabster)
    Because you have a degree to do and not enough time to learn a model inside out..
    ******** excuse. You'll make the time to do something that is important to you. Financial modelling didn't feature in my studies at all, I made a deliberate effort to learn it, just like many do.

    Accounting, modelling and valuation is the fitness test of IB. You know what's expected of you and the information is readily available online. If you aren't willing to prepare accordingly then you clearly aren't that interested in the role.
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    (Original post by Kiltennel)
    ******** excuse. You'll make the time to do something that is important to you. Financial modelling didn't feature in my studies at all, I made a deliberate effort to learn it, just like many do.

    Accounting, modelling and valuation is the fitness test of IB. You know what's expected of you and the information is readily available online. If you aren't willing to prepare accordingly then you clearly aren't that interested in the role.
    Just to clarify I don't want to do M&A...

    I just don't think it attracts the best candidates.
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    I don't know much about banking but I'd say the better candidate is the one who uses their initiative to learn as much as they can about the job, rather than sit back and expect their natural smartness to see them through
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    (Original post by Sabster)
    Just to clarify I don't want to do M&A...

    I just don't think it attracts the best candidates.
    You have to look at it from the bank's perspective. The info of what is required to pass technical interviews is readily available online, as are plenty of guides designed for non-finance students. The concepts aren't hard to grasp even for students of completely unrelated studies. With this information readily available, if they are not willing to put the effort into preparing adequately, what does it say about them and their work ethic? Are they not going to put the work in when they're 80 hours into a 100 hour week as well?

    Failing the interview process on a fit basis is unfortunate, failing the "fitness test" (technical interview) is down to a lack of effort. I say that as someone who has failed several technical interviews before.
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    (Original post by Sabster)
    Because you have a degree to do and not enough time to learn a model inside out..
    Learning to model is ****ing easy. There is literally no excuse.


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    Among candidates from a top 5 uni doing a somewhat respectable subject, average intelligence does not vary that much. Do you really think an Oxford maths student is vastly more intelligent than an LSE economics student? Also, in terms of learning speed, it seems very unlikely that a top maths student will be able to learn drastically faster than a typical economics/finance student. I don't believe there is that much innate genetic difference in people's ability to pick up banking concepts. Having said this, those that have modelling knowledge already have a head start and have demonstrated their interest by taking an active approach to their learning regarding banking. LSE economics students are busy people too, even if their course is less "intellectually challenging" than Oxford maths.

    By the way, there are absolutely no modules at Warwick that directly teach modelling properly, neither in the business school nor in maths/economics. I imagine LSE is similar. If anyone disagrees, please post the module code.

    In terms of modelling, IBD interviews typically only cover basic discounted cash flow analysis and leveraged buyout structure. Often the interview won't even cover that. In terms of accounting, questions regarding basic financial reporting, the 3 statements and treatment of specific items such as convertible bonds may be asked.
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    (Original post by Sabster)
    I am extremely confused as to why banks care about whether people know how to use excel/make financial models.

    Surely they should be looking for the smartest candidates who can pick stuff up and learn quickly rather than those who have experience in modelling (which I think is really easy for a smart person to learn).

    In my mind this means that banks end up with loads of people with finance degrees and people from LSE/Warwick (where these skills are taught) rather than the smartest people being hired.

    I wonder what people think?
    Because it's the most important aspect of the job?

    You wouldn't turn up to become a pilot if you didn't even know what the basic controls on a plane did...

    If you're really smart, you'll know what the job entails and learn accordingly, not just sit there and say you're smart. Being smart means nothing - you could be completely disinterested for all they know.

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    (Original post by Hayao Miyazaki)
    Among candidates from a top 5 uni doing a somewhat respectable subject, average intelligence does not vary that much. Do you really think an Oxford maths student is vastly more intelligent than an LSE economics student? Also, in terms of learning speed, it seems very unlikely that a top maths student will be able to learn drastically faster than a typical economics/finance student. I don't believe there is that much innate genetic difference in people's ability to pick up banking concepts. Having said this, those that have modelling knowledge already have a head start and have demonstrated their interest by taking an active approach to their learning regarding banking. LSE economics students are busy people too, even if their course is less "intellectually challenging" than Oxford maths.

    By the way, there are absolutely no modules at Warwick that directly teach modelling properly, neither in the business school nor in maths/economics. I imagine LSE is similar. If anyone disagrees, please post the module code.

    In terms of modelling, IBD interviews typically only cover basic discounted cash flow analysis and leveraged buyout structure. Often the interview won't even cover that. In terms of accounting, questions regarding basic financial reporting, the 3 statements and treatment of specific items such as convertible bonds may be asked.
    Warwick Finance Societies sort you out
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    (Original post by Hayao Miyazaki)
    Among candidates from a top 5 uni doing a somewhat respectable subject, average intelligence does not vary that much. Do you really think an Oxford maths student is vastly more intelligent than an LSE economics student? Also, in terms of learning speed, it seems very unlikely that a top maths student will be able to learn drastically faster than a typical economics/finance student.
    I don't know about vastly or anything like that.

    But my experience would be yes, Oxbridge scientists are better at fast learning of hard concepts than LSE/Warwick economics students.
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    (Original post by Hayao Miyazaki)

    In terms of modelling, IBD interviews typically only cover basic discounted cash flow analysis and leveraged buyout structure. Often the interview won't even cover that. In terms of accounting, questions regarding basic financial reporting, the 3 statements and treatment of specific items such as convertible bonds may be asked.
    I guess you are right in terms of IBD, but I think when you look at Trading the technical knowledge required can vary massively. I recently had an interview where I was doing university level option theory on the phone.
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    (Original post by Sabster)
    I guess you are right in terms of IBD, but I think when you look at Trading the technical knowledge required can vary massively. I recently had an interview where I was doing university level option theory on the phone.
    What sort of option theory questions were you asked? I'm guessing it covered topics such as options greeks and VaR or maybe hedging/abitrage techniques?

    I got asked about call/put options and futures in an IBD interview, but more from an accounting perspective.
 
 
 
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