The investment banking world is going through some major changes right now, and here’s what you need to know: MBA applications are through the roof. We’re talking a 12% jump overall in 2024, and get this – full-time, in-person programs are up by a whopping 32%. The big names are all seeing huge spikes – Columbia’s up 27%, Harvard’s up 21%, and Chicago Booth has jumped 22%.
So what’s happening on Wall Street? Banks are shaking things up by promoting more analysts straight to associate roles instead of bringing in fresh MBA grads. One big bank even cut their summer associate class in half to make room for these internal promotions. They’re betting that keeping their own people happy and sticking around is the way to go.
But not everyone’s thrilled about this. The senior bankers, especially, are raising eyebrows. They’ve always had a soft spot for MBA-trained associates, and for good reason. These folks typically show up with polished presentation skills, a solid grasp of business concepts, and real-world experience from different industries. Plus, there’s just something about that MBA polish that’s hard to replicate.
Competition for spots is getting intense. The candidate pool is packed with seriously qualified people, including a bunch of tech folks who got caught in recent layoffs. Even really strong candidates are finding it tough to land roles.
Looking at the next year or two, expect things to get even more competitive. Banks can afford to be picky, and they probably will be. This might even push salaries down a bit – simple supply and demand at work.
But here’s where it gets interesting: in the longer run (think 3-5 years), banks might have to rethink this whole “promote from within” strategy. There’s a growing worry that they might need to bring back more MBA hiring to keep their talent pool strong. If they don’t, they risk losing good people to other industries that are more than happy to snap up banking talent.
The real challenge for banks is finding the sweet spot. They need to figure out how to keep their analysts happy with promotions while still bringing in fresh MBA talent. Some are talking about a mixed approach – promoting their stars while still hiring MBAs to bring in new perspectives.
There are some real risks to manage here. If banks make it too hard to move up, people will leave. If they change too much too fast, they might mess with the culture that made them successful in the first place. And let’s not forget – other industries are getting better at poaching top banking talent.
Bottom line? The next few years in investment banking recruitment are going to be really interesting. Banks need to play this smart to keep attracting the best people, whether they’re coming up through the ranks or fresh out of MBA programs.
Whether you’re running an internship program or toying with the idea of getting an MBA, feel free to reach out to me to discuss strategy. Happy to share additional color on this topic given my number of years in the space and the 1,000+ MBAs I’ve hired throughout my career.
