by Brian DeChesare Comments (8)

The Virtual Internship Post-Mortem: How Well Did They Work, and Will Banks Repeat the Experiment?

Virtual Internship Post-Mortem

While 2020 has certainly been a surprising year, one specific event surprised me the most: the fact that most banks kept their internship programs and made them “virtual.”

Back in March, I thought that many banks would cut their programs.

While that happened in a few cases, most of the firms that canceled their summer internships were in other industries, especially hard-hit ones like travel and entertainment.

The large banks decided to run a giant experiment where interns completed shortened, “virtual internships.”

And, like all experiments, not everything went according to plan:

What Did These Virtual Internships Consist Of?

Even in normal times, it’s difficult to give interns meaningful assignments and get useful output from them.

It takes a few weeks to learn the job and the work environment, and even if you walk in knowing Excel and PowerPoint shortcuts, those skills are not sufficient to perform well.

You also need to communicate effectively with team members, ask for work and get feedback without being annoying, and make full-time bankers’ lives easier.

Since it takes time to learn those skills, banks have always been reluctant to assign significant “real work” to interns, at least when they first start.

Virtual internships made this process even more challenging because:

  • Internships were shortened to half their normal length.
  • It’s difficult to build rapport and develop trust when you interact only via email, calls, and Zoom. It’s just not the same as having a casual chat with someone in real life.
  • Deal flow was much lower than usual because so many companies took a “wait and see” approach due to the ongoing pandemic, lockdowns, and recession.
  • Some groups, like healthcare, were busy, while others had little to do.
  • And confidentiality concerns made some banks reluctant to have interns contribute to pitches, let alone live deals.

As a result, investment banking virtual internships were “hit or miss,” but mostly missed.

We saw a huge range of different experiences among students and coaching clients; a few examples include:

Virtual Internship Example #1: The Random Presentation Intern

One student was interning in investment banking in Asia, and his entire internship seemed to consist of arbitrary presentations.

These weren’t even pitch books, company profiles, or market update slides.

Instead, they were framed around questions like:

  • What do you think about Company X’s IPO? Did banks execute it successfully?
  • How will technology change investment banking over the next 10-20 years?
  • How have Venture Capital Firm X’s investments performed? What did they do correctly or incorrectly?

My guess is that this group had so little to do that they just created random assignments, with each one taking a few days to complete.

Virtual Internship Example #2: Live Deals?

In another case, an intern was staffed on a buy-side M&A deal and had to start researching and analyzing potential targets right away.

This was still not “mission-critical” work because it wasn’t an urgent client request, but at least it was related to a deal.

Interns at this firm also had to build full pitch books and present them to the senior bankers by the end.

Virtual Internship Example #3: Public Comps and Company Profiles

In another case, a large bank told interns they would not be staffed on live deals but would contribute to some “real work.”

In practice, this meant a lot of comparable company analysis (“spreading the comps”) and company profiles for pitch books.

I suppose this was better than working on fake projects or presentations, but not by much.

Virtual Internship Example #4: Small Tasks, Meetings, and Downtime

And in another case, one intern at a different firm completed a few smaller tasks each day (similar to the ones above), logged into a few meetings, and spent most days… doing nothing.

There was an incredible amount of downtime, so he brushed up on financial modeling and went through pitch books, presentations, and models from the group’s past deals.

Sales & Trading Virtual Internships

I’m not quite sure what “virtual” sales & trading interns did because the whole point of sales & trading internships is to interact with different desks, get to know the full-time team, and order lunch for everyone.

S&T interns cannot trade or speak with clients, so internships consist of networking and helping with smaller tasks that might save the team time (e.g., automating processes in VBA or Python).

This year’s market environment made it even worse for salespeople and traders because:

  • They had to handle much higher trading volumes with the same number of staff.
  • More volume shifted to electronic trading systems, which further incentivized banks to automate rather than hire more people.
  • There was a big increase in S&T revenue at some banks in Q2, but banks know that volatility won’t last forever – so they did not necessarily commit to more hiring.

Most of our students and customers intern in deal-based roles, so I have limited firsthand data here.

But it’s fair to say that virtual S&T internships were even more of a “miss” than IB ones.

How Did They Award Full-Time Return Offers?

In normal times, you win a return offer from a summer internship based on your work product, enthusiasm/availability, and “fit” with the rest of the team.

This year, however, banks judged interns mostly based on work product and availability because it’s almost impossible to assess enthusiasm and fit remotely.

So, banks heavily weighted the following attributes:

  • Responsiveness: Did you answer every phone call? Reply to all emails and messages within 15-30 minutes?
  • Communication: If you couldn’t meet a deadline, did you explain the issue and ask what to do? Did you clarify tasks before submitting work?
  • Attention to Detail: This one is tougher if you can’t print your work, but did you at least check your documents and fix errors before submitting them?
  • Time Savings: Did you make the lives of full-time Analysts easier? Were you already efficient enough at Excel and PowerPoint to complete 15-minute tasks in 15 minutes rather than hours?
  • Proactiveness: After completing your tasks, did you think about the next steps and ways to finish them more efficiently? And did you communicate these to the full-time bankers?

Interns who did not receive full-time offers usually suffered because of a lack of responsiveness.

Not only is it easy to assess this one, but it’s also easy to get distracted and become less responsive when working from home.

For example:

  • You just signed in at 9 AM, read a few emails, and now you’re waiting around for work.
  • An hour passes, and no one has given you anything to do. You’re reviewing models and presentations, but since it’s a slow day, you decide to take a “quick break.”
  • So, you start playing Fortnite or watching something on Netflix or browsing random websites.
  • It’s now 11:30 AM, and you switch over to your inbox – only to realize that an urgent request came in at 10:30 AM. Oops.

It’s not the end of the world if it takes you an hour to respond to one urgent email, but if this happens repeatedly, it hurts your chances of receiving a return offer.

If you’re physically at the office, there’s much less risk of this happening unless you take extended coffee breaks all the time.

Full-Time Offer Conversion Rates

When virtual internships were first announced, a few banks, such as Citi and Moelis, promised to give all virtual interns full-time return offers – and they did.

Most of the other bulge bracket banks could not do this because they tend to over-hire interns and use internships as extended, final-round interviews.

That said, conversion rates for most banks were in a fairly normal range (~60-80%, with some closer to 100% and some a bit lower).

Even though there’s a huge amount of uncertainty, banks still need a certain number of new Analysts and Associates each year, so it’s not surprising that conversion rates were similar.

No Full-Time Return Offer: What to Do?

If you did not receive a full-time return offer, I’m not sure how much the normal advice applies.

Yes, you could target boutique banks, go outside investment banking and apply to Big 4 or business valuation firms, or delay graduation

…but the problem is that most firms will not be hiring much outside their summer intern classes this year.

The other issue is that summer internship recruiting for next year (2021) is already finished at the large banks in the U.S., so delaying graduation may be an even worse idea.

Your best bet may be to target regional offices of smaller banks, as recommended in the last-minute IB recruiting article.

The quality of interns outside of major financial centers tends to be “mixed,” and sometimes those offices end up being understaffed.

If that does not work, and you also don’t have good options for related jobs, then your next-best plan might be a Master’s in Finance program – ideally one that lasts more than 12 months, so you get more time to prepare and apply for summer internships.

So, Will Virtual Internships Become “a Thing”?

Banks do not want to conduct virtual internships again.

Not only is it difficult to train and evaluate interns, but full-time bankers get even less useful work out of the interns than usual.

That said, if the pandemic situation does not improve by next year, yes, virtual internships might happen again.

JP Morgan just announced that most of their corporate and investment banking staff will “work from home” for part of the time going forward.

If other banks adopt the same policies, then future internships could also be a mix of virtual and in-person.

The other big question is whether or not banks will hire fewer interns if all internships become virtual or mixed virtual/in-person.

There may not be an immediate change next year, but yes, overall intern hiring could decrease over the next few years if this virtual situation persists.

The upside is that full-time offer conversion rates may increase; the downside is that it will become more difficult to win an internship in the first place.

Your Turn

I’m always interested in hearing firsthand from anyone who went through the process this year, so I’ll close by turning this around to you:

  • If you completed a virtual internship this year, how was it (i.e., better or worse than expected)?
  • Did you do anything useful, or was it mostly “fake projects”?
  • What did full-time return offers look like at your bank?
  • And if you did not receive a full-time return offer, what are you going to do?
M&I - Brian

About the Author

Brian DeChesare is the Founder of Mergers & Inquisitions and Breaking Into Wall Street. In his spare time, he enjoys memorizing obscure Excel functions, editing resumes, obsessing over TV shows, traveling like a drug dealer, and defeating Sauron.

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  1. Did an IB internship at an MM bank. The return offer status is “on hold” since the firm is still considering if they want to hire full-time employees due to coronavirus pandemic. Not sure if I need to try graduate program in some bank, or apply for master in finance in UK (I am not in UK but do consider work there in the future).

    1. That is a tough one. I think it might be good to at least apply to a Master’s in Finance degree just so you have it in case the bank still can’t decide what it wants to do (and then you can just defer if they end up extending an offer). I don’t think you need to apply to other banks because you’ll run into the same issue elsewhere.

  2. Did a prop trading internship. Work varied substantially depending on which trader you were assigned to. Mostly it was daily mock trading competitions, presentations, research, and other things that seemed mostly like busywork. Some interns coded things. There were also a lot of zoom conferences where senior traders told war stories.

    Ended up not getting a return offer, which sucks. Now I’m desperate.

    1. Sorry to hear that. I heard some prop trading internships at the bigger firms were fairly good, but I guess it varied a lot. I think you should be able to win some type of prop/trading/quant role somewhere else if you have a technical background.

  3. Thank you! 8 months between graduation and start date seems like a long time. Should I try to do something productive so that I don’t have a gap on resume?

    1. Sure, if you can. But I don’t think it matters that much because you already have the full-time role, and who knows what will actually be open by then. Even something like taking classes or online classes or studying for the CFA could work.

  4. I did one “intern project” and some ad-hoc “real work” but overall the workload was quite light. I received a return offer to start from end of August 2021, but I will graduate in December this year and have the possibility to ask for an early in January. Do you think I should wait for 8 months to avoid off cycle virtual onboarding?

    1. Congrats! Yeah, I would recommend delaying your start date until August 2021 because it’s generally not a great idea to start the job early, especially if they want to start you virtually instead.

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