Compliace vs. Credit Analysis Job

IMO, Credit. Compliance is truly a back office function. You may have job security but I'm assuming you are building decks, making presentations, aggregating metrics related regulatory policy which can be spun in an interesting way but seems pretty boring.

Depending on the firm, credit analysts do the same sort of stuff an IB analyst would do. Analyze financial statements, prepare written, analytical documents on portfolio companies, industries, etc. which could be transferred virtually anywhere. I wouldn't worry about job security. Post-financial crisis it's unlikely a bank would trim it's credit function.

Thanks / bump

This is emblematic of a larger issue and portends inevitable future financial crisis.

Traditionally, a credit role is the training grounds of a future banker and risk manager (strictly speaking - not your Rolling Stones, populist definition). The credit role teaches how to identify and mitigate true financial risks within companies, markets, individuals, and the economy.

Compliance deals with regulation - regulation that got it wrong last time and will get it wrong next time. Compliance is not banking - you aren't learning to identify the real risks - just the ones that holier-than-thou regulators think are important. This is not the training grounds of future risk managers - all you would be learning is how to follow faulty regulation.

The issue is that you are even questioning between the two but given the current regulator environment, it makes sense to think that compliance can be a more stable and/or better position. Regulation is incentivising non-banking roles at banks - in effect creating a worse system in the long run. This is not an equilibrium that will make for a more stable banking system but it will appease the populace because it is what the politicians say the bank "deserve".

I am not looking for some "noble purpose" I am looking for the job with the best job prospects and ultimately pay in the long run. Unless you expect the banks to become completely deregulated in the next 10-15 years, then compliance is a safe position. Like it or not we all have to follow rules. In banking and in many other industries compliance will live on.

br0ski wrote:

I am not looking for some "noble purpose" I am looking for the job with the best job prospects and ultimately pay in the long run. Unless you expect the banks to become completely deregulated in the next 10-15 years, then compliance is a safe position. Like it or not we all have to follow rules. In banking and in many other industries compliance will live on.

Sure, but the compliance function is a direct response to regulation and not critical to any banks primary operations. While Dodd-Frank repeals could effect the scope of a firms compliance dept, credit truly "will live on". But that's irrelevant to job prospects/pay. Compliance isn't banking and it's a graveyard in terms of finance careers. Credit is relevant, interesting, pays well and, depending on certain factors, can lead to much better opportunities.

Sure, but complying with regulations is critical to any banks primary operations.If not complying, bank regulators will shut you down, there is no question about that.

I see your point about it not being banking in the most literal of terms, but it is currently very much crucial to a banks viability. Credit may be more transferable, but is it not also likely to go to machines sooner rather than later? I understand there is nuance and an "art" to determining the risk of a loan, but much of it is based on numbers and creidt analysis could soon become automated could it not?

br0ski wrote:

Sure, but complying with regulations is critical to any banks primary operations.If not complying, bank regulators will shut you down, there is no question about that.

I see your point about it not being banking in the most literal of terms, but it is currently very much crucial to a banks viability. Credit may be more transferable, but is it not also likely to go to machines sooner rather than later? I understand there is nuance and an "art" to determining the risk of a loan, but much of it is based on numbers and creidt analysis could soon become automated could it not?

I guess it depends on what you are referring to when you say credit analysis. There are credit review and operational functions that act almost as compliance for credit. Those may be automated to a degree. But most banks are pretty sophisticated tech wise and have weathered a pretty extreme downturn. Any offshoring or loss of jobs to consolidation/technology likely would have already occurred.

Credit can sit within the Investment Bank or Risk depending on the bank. They are responsible for the credit relationship of a deal and portfolio and work in parallel with any and all bankers. ie. M&A transaction, loan, trade. Larger banks have credit teams dedicated to specific products and industries, mirroring their investment banking teams. Their function would be difficult to automate.

Credit analysis over compliance.

Credit analysis is a key role/skill and building block for a number of career options. It is central to banking and many other functions -- and even roles outside of traditional banking. It also has revenue-producing potential.

Compliance is ultimately a non-strategic, non-core, quasi-clerical/admin role that will ultimately be looked upon as a secondary role in banks. It also has little application outside of banking.

This is a no brainer, at least in the long-term.