Not the best of industries to be in at the moment but it'll recover in time.
I'll give you my perspective on this as someone who has worked in finance for roughly eight years--primarily in equities--in three countries (Australia, UK, Switzerland).
Investment banking--even IT jobs--I have found to be a bit of a boys club. The easiest path of entry is to go to a decent school, get good grades and then apply for a graduate program because once you've got a few years of IB experience, it's pretty easy to work for another one later. This is what I mean by a boys club.
But if you come to the industry later it can be a lot harder. The best strategy is to get in when the economy is good. When the economy is bad you'll find a lot more candidates per job and many of those candidates will have IB experience (eg like those who worked at Lehmans), putting you at a severe disadvantage, particularly in larger cities (where such work tends to be) where recruitment is often quota-driven so you may not even get heard.
By quota-driven I mean it's common practice for certain banks to use certain recruitment agencies called PSLs ("preferred supplier lists"). A given bank may have 5 agencies on their PSL and they will take 2 CVs from each of them for 10 total. Rarely more than half will be telephone interviewed, 1-2 will be interviewed in person and from there they'll get a hire (unless noone suitable is found).
Now in London out of all the places I've worked in particular you have some extremely unscrupulous behaviour from recruitment agents that can make this a challenging (actually I've used the phrase "soul destroying" to describe this process) scenario particularly in a tight labour market. The point is that you may think you've been submitted for a particular job. The agent may tell you that straight to your face but you haven't. This can go as far as fake interviews. But anyway I digress. The main point I want to get across is that in larger cities--where these jobs are concentrated--this can be tough to break into for many reasons when the economy is bad.
All that aside, there most definitely is useful domain knowledge you can get.
The first thing to understand is that there are many areas within IB: M&A (mergers and acquisitions), information services/research, corporate finance and so on. All of these areas have IT needs. But the area with the biggest concentration of IT needs is in financial markets.
Financial markets includes but is not limited to:
- Equities: ie the stock market. Now this gets the most press but is at best the third largest of the various markets;
- Foreign Exchange: self-explanatory and a huge market but not the largest. The biggest FX market is the interbank market which is an oTC (over-the-counter) market meaning contract sizes, expiry dates and so on are customized for the buyer or seller. Futures contracts in comparison have standardized expiries, sizes and terms;
- Fixed Interest: probably the largest market of all. Here we're talking about bonds and swaps (and derivatives). This is divided into government and corporate bonds and the largest segment is US Treasuries;
- Commodity Futures: this includes grain, soy and other standardised products on, say, the CME (Chicago Mercantile Exchange) but also includes oil and metals (eg LMX, the London Metals Exchange);
- Credit Derivatives: thanks to the sub-prime fiasco the general public probably knows a lot more about these than they ever did previously. Here we're talking about credit default swaps and the like; and
- Derivatives: these can apply to any market and include most notably options (ETOs--exchange traded options, which are standardized--or OTC) and can get pretty surreal when you start getting into the increasingly popular "exotics".
Now within each of those market segments you tend to have:
- Front Office: trading;
- Back Office: settlement; and sometimes
- Middle Office: this means different things to different people but tends to revolve around risk management, P&L (profit and loss) and the like.
My experience is almost all in Front Office where you're concerned with things like market connectivity, quote/pricing systems and so forth. Market connectivity is a big one. There are more markets out there than you've probably heard of. Apart from the obvious equities markets (NYSE, NASDAQ, LSE, etc) big ones include Bloomberg, Reuters, Tradeweb, EuroMTS and many, many others.
A key point to understand with banks is that typically they are price makers (also called "market makers") not price takers. If you trade stocks online you are a price taker. Typically when you buy or sell you do so from or to a market maker who might, say, have a quote on stock ABC for 32.03/32.11 (bid/ask) with a spread of 9 cents. There tends to be an inverse relationship between volume and spread (low volume markets have a larger spread).
Market makers tend to be unfairly maligned sometimes but they provide an extremely valuable function by providing liquidity (which is the ability to buy or sell quickly).
Now I mention the above to give you a broad base of understanding to see where iT systems are required and what sort of knowledge is required.
I'd say useful criteria are:
- Any technical work that is high-volume, low-latency, involves a lot of concurrency and/or is high availability is useful;
- Interestingly languages don't tend to matter nearly as much as domain knowledge. In fact it's fairly common practice for developers to use whatever the heck they want. Sometimes a particular stack will be mandated (eg Java/Oracle or .Net/SqlServer) but often that isn't the case;
- Web/scripting languages (eg Ruby, PHP, Perl, Python) are almost nonexistent. Perl is a possible exception in that you might find it used for support tasks. Not much beyond that though (in my experience). Java, C#, C++, Oracle, SQL Server and even Sybase rule the roost here technology-wise;
- A reasonable level of mathematical competency. You may not need to ever code a bond pricing formula but you may need to understand concepts such as discounting and the like. There are also fields that are highly mathematically focused and may even require post-graduate qualifications in mathematics, typically in the realm of game theory, Monte Carlo simulations and the like. Maths will only help you
- Basic knowledge of the trading/settlement process helps. I don't mean you need to know the Australian equities settle in T+3 but Australian equity options settle in T+1 but just what the order and settlement life-cycles are; and
- Basic knowledge of relevant financial instruments (including derivatives) within at least one of the above market segments.
You might consider it worth your while doing, say, a graduate diploma/degree in applied finance. Your country may have a professional body that offers such a thing or you can do it at a normal college. In Australia and the UK these tend to be one year full-time, typically done as two years part time. That's for a Graduate Diploma. Double that for a Master's. I don't really know the American equivalent.
You don't need formal education for this but formal education can be put on a CV. It's perfectly acceptable to read about this on your own (but harder to substantiate).
It's worth noting that following the financial press is also useful. You don't need to spend an hour a day going through the Wall Street Journal or Financial Times from cover to cover. I just mean some basic knowledge of whats going on int he world of finance. If you can explain what a CDO or a negative amortization loan is (both relevant to sub-prime) then it demonstrates a certain amount of interest and/or initiative.
Now I won't lie to you and ay you'll automatically get a job by doing such a thing but the knowledge can definitely be useful and it might help you stand out in a large field of candidates enough to get an interview where you otherwise might not. It will certainly hold you in good stead if you end up working in that industry.