Investment Banking Tiers: Understanding Front, Middle & Back Office Roles

Investment banking groups have different tiers that help run the business of the investment bank. Although commercial banks and other large financial institutions have absorbed most of the traditional investment banking groups, investment banking nonetheless still exists as an important way to create capital for companies in order to expand the economy.

Front Office Tier

The front tier of an investment banking group is the investment bank. This is the heart of the group where deals are written to bring companies to market, locate financing in the equity, debt markets and sell companies securities. The front tier is represented by the Gordon Gekko's popular “Wall Street” or Donald Trump's “Art of the Deal” vision of Wall Street and what happens on Wall Street.

Middle Office Tier

The compliance, financial and risk management aspect of the investment banking group resides in the middle market. This is the aspect of the business that gets the least notoriety but keeps the trains running on time. It differs from the front office in that it is more substance than flash and is designed to keep the investment bank out of legal, regulatory and financial trouble.

Back Office Tier

The back office functions to process trades and handle customer accounts for the investment banking group. This is the least attractive side of investment banking and contains the operational functions that are crucial for the middle and front office to operate.