The Difference -
Traditionally, front office staff are the folks in contact with the consumers or clients, while the back office staff are the people behind-the-scenes working in administrative or support roles.
Of course, in modern businesses it’s a whole lot more complicated than that, and there is often some crossover and confusion over what constitutes a front office and back office role.
Nowadays, ‘front office’ and ‘back office’ are terms most bandied around in investment banking, which is what this article focuses on. In investment banks, the relationship between the front and back office is a slightly different kettle of fish.
Once we've helped you figure out the difference, why not check out the front and back office roles on our jobs board?
Simply put, front office staff are the people who directly generate revenue for the company. The front office largely consists of client-facing roles. So in a finance company or investment bank, front office departments might consist of sales and trading, investment banking, wealth management, and private equity.
The exception to the rule is equity research, which is often considered front office, even though it doesn’t directly bring in revenue.
Therefore, if you want to want to work directly in an investment role (e.g. as a commodity broker, financial trader or as a corporate investment banker) then the front office will be your stomping ground.
This is a bit of an investment banking unicorn: you either believe in it or you don’t. For some, the middle office is simply the back office; others think a distinction needs to be made.
They would argue that a middle office role links the front and back office, providing the front office with a support function that plays a more direct role in revenue generation.
The middle office is a netherworld, a grey area with constantly changing boundaries. For example, someone might cite operations, corporate treasury, risk management and strategic management as middle office departments.
Others would just limit it to risk, credit and strategic management. You could argue that an operational investment banker is middle office, although many would simply lump them in with the back office crew.
Speak to someone in the front office and they might have you believe that the back office is a no-go zone and that EVERYONE in the back office really wants to be in the front office, but this isn’t necessarily always the case.
The back office is comprised of the areas that don’t directly generate revenue for the business, but provide vital support and administration.
The back office in an investment bank might encompass departments like I.T., operations, HR, accounting and compliance. They perform functions that mostly focus on processing or support.
Despite sniffy remarks from the front office, without these guys the business wouldn’t be able to run. Back office staff design the computer systems, maintain the databases, handle the company finances and seek out new talent.
The front office depends on the support of the back office to function effectively.
Some roles which were traditionally dismissed as back office are rising in prominence. Technical roles have developed beyond I.T. support, especially as investment banks now heavily rely on developing the latest technology.
As a result, technical roles in areas such as development and infrastructure engineering are steadily increasing in importance and status. Whilst banks might be flooded with applications for front office roles, it’s for these technical roles that they are desperate to recruit top talent.