Conclusion

In today’s world taking investment decision is a vital activity and significantly the process of investment Banking is constantly evolving especially as far as the investment banking products are concerned. In fact a survey in the market scene shows that these are the banks that are constantly inventing new products. What is a major factor to be taken into account is that these products are usually accompanied by very high profit margins and this basically is mandatory as the buyers are not sure how to value them.
The only negative point to this whole scenario is that as these products cannot be patented or copyrighted, they are very often copied quickly by other Investment Banks. This basically causes a downslide and the margins are forced downward as the pricing approaches commodity pricing; hence it can be said with conclusion that in the history of investment banking though many have theorized that all investment banking products and services would be commoditized, and the concentration of power in the bulge bracket would be eliminated yet in real life it has failed to happen. The reason behind this is simple and while many products became commoditized, new ones were constantly being invented. Take for example the trading stocks for customers, which is now a commodity style business. However at this juncture it is worth being mentioned that by creating stock derivative contracts is now a very high margin business. This is simply as the contracts are difficult to evaluate and apart from that while many products have been commoditized, an increasing amount of investment bank profit has come from proprietary trading. This thus is a must as size creates a positive network benefit.
It cannot be denied that for first time investors or those not confident of the market the Investment banks have a vital role to play as they are basically the institutions that assist public and private corporations in raising funds apart from providing them strategic advisory services for various kinds financial transactions. Investment banks differ from commercial banks. Thus while a commercial bank serve to directly take deposits and make commercial and retail loans the investment banks act more on an advisor capacity. In recent years, however, the lines between the two types of structures have blurred and now there is not much tangible difference between both kinds of banks. It is imperative to mention here the Glass-Steagall Act of US. The act was initially created in the wake of the 1929 market crash and what is significant is that it basically prohibited banks from both accepting deposits and underwriting securities. In the coming years however we notice that the Gramm-Leach-Bliley Act repealed the Glass-Steagall in 1999.
Whatever be your choice of investment the basic rule remains the same and that’s you must go to a proper person for investment advice before you make a deposit.