The Perils of Using AI for Investment Banking Interviews

Picture this: It’s 2 AM, you’re on your fifth espresso, surrounded by a fortress of finance textbooks, and you’re wondering if you’ll ever understand the intricacies of LBO modeling. Suddenly, a thought as dangerous as it is tempting flashes through your caffeine-addled brain: “What if I just use AI for my investment banking interview?”

In investment banking, where million-dollar deals are won or lost on the strength of an excel formula, the idea of outsourcing your brain to an AI chatbot is about as wise as using social media threads for your due diligence.

But before you consider this risky shortcut, let’s explore the potential pitfalls of AI-assisted interview preparation. Buckle up.

1. AI Can Make You Sound Generic

Imagine sitting across from an experienced Managing Director. They ask why you’re passionate about M&A. You confidently recite an AI-generated response:

“I’m drawn to the dynamic nature of M&A and the opportunity to work on transformative deals that shape the business landscape.”

Congratulations! You’ve just recited a very generic answer. The MD’s interest fades quickly. Your originality is not shining through.

2. Technical Prowess That Might Fall Short

Let’s see how an AI-generated response might play out in a technical question:

MD: “Walk me through the impact of depreciation on the three financial statements.” You (channeling AI): “Depreciation increases on the income statement, decreases on the balance sheet, and increases on the cash flow statement.”

This response demonstrates a basic understanding of accounting, but misses the crucial point that depreciation is a non-cash expense that actually increases cash flow on the CF statement.

3. When AI Turns Due Diligence into Fiction

Relying on AI for company research can lead to embarrassing mistakes. For example:

You: “I’m impressed by your firm’s recent work. The leveraged buyout of [Major Tech Company] by [Defunct Company]? Genius. And your advisory role in the merger between [Outdated Social Platform] and [Ancient Empire]? Truly visionary.”

The MD’s expression would likely shift from confusion to disbelief. They might wonder if this is a prank or a serious misunderstanding.

4. The Challenge of Follow-Up Questions

Interviews often involve follow-up questions, which can be challenging when relying on AI:

MD: “You mentioned you’re interested in our healthcare coverage. What are your thoughts on the recent wave of AI-driven diagnostics companies going public?” You (struggling to provide specifics): “Well, AI is revolutionizing healthcare diagnostics, making it more accessible and accurate.” MD: “Interesting. Can you name a few of these companies and their specific technologies?” You: “Uh… [Generic Tech Company]? And… [Well-Known Health Website]?”

5. Cultural Fit: AI Might Miss the Mark

Every bank has its unique culture. AI might not capture these nuances:

You: “I’m excited about [Bank A]’s commitment to innovation and its startup-like culture.” MD at [Bank B]: “…This is [Bank B].” You: “Right, that’s what I meant. Go [Bank B]!”

6. The Risk of Getting Caught

Imagine reciting AI-generated content about WACC calculation, when the MD interrupts:

“That’s fascinating. It’s also word-for-word from page 394 of Rosenbaum & Pearl’s Investment Banking guide. Did you memorize the entire book, or are you using AI assistance?”

This scenario could seriously damage your credibility and chances of success.

7. The “Fake It Till You Make It” Approach May Backfire

While AI might help you bluff through an interview, what happens when you land the job and are asked to build a complex financial model?

Analyst: “Can you help me with this model?” You: “Certainly! Let me just quickly consult my… vast repository of knowledge.” Three hours later You: “So, I’ve calculated that the company’s value is negative $500 billion. Is that good?”

8. When AI Goes Off Track: Potential Misinformation

AI can sometimes produce inaccurate information:

“The Volcker Rule was recently amended to encourage proprietary trading among major investment banks, particularly in cryptocurrency derivatives.” “ESG investments are typically classified as high-risk, high-yield instruments, popular among hedge funds specializing in short-term arbitrage.” “The Federal Reserve’s primary mandate is to maintain stable gold prices and regulate the production of NFTs.”

Imagine confidently stating these inaccuracies in your interview. It would likely not end well.

Conclusion

There’s no AI shortcut to investment banking success. The path to your first all-nighter building a merger model requires genuine hard work and understanding.

Avoid the temptation to rely heavily on AI. Instead, focus on truly understanding every line item in an income statement. Practice building DCF models until you can do it in your sleep. Because in the competitive world of Wall Street, those who can’t handle the pressure don’t succeed.

Remember, in the world of  finance, it’s far better to admit when you don’t know something than to confidently present inaccurate information. Honesty about your knowledge gaps might lead to a learning opportunity, while presenting AI-generated misinformation could seriously harm your prospects.

Now, if you’ll excuse me, I have some junior analysts to mentor and some deals to close. Time waits for no banker, and these pitch decks won’t write themselves – at least not until AI becomes sophisticated enough to do that too.

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