by Girl Banker
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As an eager banker-wannabe whenever I heard the term "back-office" I imagined a category of overworked and underpaid workers toiling away in a windowless room at the back of a building! Personally, I find the term a little derogatory.
In banking, the terms: back, middle and front office refer to how closely connected you are to the money train.
Front office workers make the money. Their actions lead directly to more or less money being added to the bottom line of the bank. Front office workers will earn the highest bonuses because they essentially make the money and as such expect a higher cut.
In theory, the more money you earn for the bank, the higher your expected bonus is. In a recession, bonus expectations will be lower overall but front office workers will still expect more than those further down the chain.
Front office does not have to be client-facing e.g. traders usually do not see clients but if you are client-facing you will need to look smart and dress well for meetings. If you hate suits, this is not the best job for you!
Front office includes:
Middle office workers are an integral part of making money. They directly support a deal but their actions have to be instigated by a front-office worker. A middle office worker cannot as a result of their own actions increase bank profits.
Middle office includes:
Back office includes any process-orientated roles. An efficient back office is vital because if clients don't get statements and confirmations on time they will hate your bank and could, on that basis, exclude your bank from deals.
How can back office impact front office deals?
Imagine you work on a company's small corporate finance team; you have ten bank relationships to manage. One bank consistently sends statements late. The statements frequently have errors and you have to call many times to get issues sorted - if it can be helped you're going to avoid doing business with that bank, aren't you?
Back office includes:
So there you have it. When you're applying for jobs it can be a little challenging to decipher whether a role is front-office or not. This is especially true if you're applying off-cycle to a bank that has both a retail bank and an investment bank.
Use the above guidelines to help you decide how close you are to the money train. You want to get as close as possible.
I created my investment banking blog in 2012 as soon as I resigned from i-banking & published my book, To Become An Investment Banker.
Initially published at girlbanker.com, all posts have now been subsumed into my personal website under katsonga.com/GirlBanker.
These blog posts make it as straight-forward for you as possible to get into a top tier investment bank.
I have 7 years of front office i-banking experience from Goldman Sachs and HSBC, in both classic IBD (corporate finance) and Derivatives (DCM / FICC).
I'm also a CFA survivor having passed all three levels on the first attempt within 18 months - the shortest time possible.