Banks Are Still Hiring Analysts. They’re Just Looking for Someone Different.
Ask most people about graduate hiring in 2026 and you’ll get the same story: too many applications, too few jobs, and AI muddying everything in between.
The first part is true. Graduate employers in the UK received an average of 140 applications per vacancy in 2025, up 14% on the year before. Twenty years ago the figure was 38 (Institute of Student Employers, Student Recruitment Survey 2025, reported in The application explosion: key insights for employers, April 2026).
The second part doesn’t match what we see in banking. Across the advisory and investment banking teams we work with in London and Paris, analyst classes are being filled at much the same size as before if slightly reduced. The roles are still there partly because the attractiveness of the M&A skillset for funds and corporates remains sky-high. What has changed are the skills that the banks and funds are looking to hire.
Outside banking, the picture looks different
It would be remiss to pretend the broader UK picture is healthy despite a recovering economy. Skills England reports graduate online job adverts down 45% year on year, entry-level adverts down 25%, and youth unemployment at 16.2% in the three months to March 2026, the highest since the start of 2015 (Skills England, Annual Skills Report 2026, August 2026, citing Adzuna).
But adverts aren’t hires, and a surprising amount of the application surge has nothing to do with the number of vacancies. In ISE’s data, 22% of employers saw applications rise with no change to their vacancy numbers at all (Institute of Student Employers, The application explosion, April 2026). Applying has simply become cheap. A candidate with a decent AI tool can test interest across five sectors in an afternoon, and the funnel fills up with people who haven’t yet decided what they want.
That volume is a genuine headache for graduate recruitment teams. It just isn’t the most interesting thing happening.
Screening has become a hunt for the human
When the time cost of applying collapses, the natural response is a tougher filter. The response absorbing most of the effort right now is a filter that works out whether a person wrote the answer at all.
Employer concern about candidates misrepresenting their abilities through AI rose from 48% in the 2025 survey to 67% among those responding in 2026 (Institute of Student Employers, Student Recruitment Survey 2025, December 2025; Student Development Survey 2026, May 2026). Written answers and video interviews are increasingly assisted, so firms are leaning on whatever can’t be produced in a browser tab: live conversation, case discussion, and the way someone thinks out loud.
That shift is defensive in origin, but it has a useful side effect. The parts of the process that are hardest to fake are also the ones that show you how a person reasons and communicates. Which happens to be exactly what clients have started asking for.
The job changed before anyone redesigned it
Of the employers ISE surveyed, 43% said entry-level roles had already evolved in response to AI with no formal redesign at all. More broadly, 87% expect AI to reshape graduate roles. The tasks in decline are routine administration, basic data work and first drafts. The skills on the rise are critical thinking, AI literacy, communication and adaptability (Institute of Student Employers, Student Development Survey 2026, May 2026, based on 144 employer responses collected January to February 2026).
It isn’t hard to picture what that means on a deal team. A good part of a first-year analyst’s week used to go on building, checking and formatting. More of that now gets done faster, and the analyst is pulled earlier into the conversation about what the numbers mean, whether the story holds together, and how to put it to a client who is sceptical.
What clients are actually asking us for
When we talk to desk heads about junior and early associate hires, three things come up again and again.
The first is communication. Not polish for its own sake, but the ability to explain a view clearly to a VP at eleven at night or to a client CFO on a call nobody prepared them for. Juniors are getting in front of people sooner, and the ones who can hold their own stand out quickly.
The second is critical thinking. If the first draft of the analysis arrives faster, the value moves to the person who can look at it and ask whether it’s right. Clients want juniors who notice when something doesn’t add up and say so.
The third is technical understanding, and the word we’d use is budding. Nobody expects a finished modeller at 22. They do expect someone who understands what a model is for and has the numeracy to grow into it. Financial services sets a high floor here: required numeracy proficiency sits at 4.3 against a UK average of 3.1, and digital literacy at 4.2 against 3.2. Nearly all, 99%, of projected additional employment in the sector’s priority occupations requires qualifications at level 4 and above, compared with 62% across the wider economy (Skills England, Sector Skills Needs Assessment: Financial Services, August 2026).
Interestingly, the same report finds around 75% of financial services firms already using AI, yet only 0.5% to 1% of workers need specialist AI skills. The sector isn’t looking for juniors who can build the tools. It wants people who can work alongside them with good judgement.
Why firms are hiring for it rather than training it
Part of the explanation may sit in training budgets. Total business training expenditure in England fell from £49.4bn in 2019 to £44.8bn in 2024 in constant prices, a 9% drop and roughly £250 less per employee. Over the longer run it is down 19% since 2011 (Skills England, Annual Skills Report 2026, August 2026).
Technical skills can still be taught on the job, and banks remain very good at teaching them. The softer qualities are slower and harder to build, and with less money going into development, it makes sense that firms would rather find them at the door.
A note of balance
None of this means graduate programmes are failing or that firms screening hard are doing anything wrong. At 140 applications per seat, a heavy sift is hardly a free choice. Internships also give firms a much better read on a candidate than any form: 77% of employers agree former interns show greater work readiness (Institute of Student Employers, Student Development Survey 2025, December 2025). One of our clients refuses to hire graduates who haven't interned at the bank, citing too many instances of it not working out with people whose CVs were – on paper – an excellent fit.
It’s also fair to admit that some of what clients want, adaptability above all, is difficult to assess at any kind of scale. We haven’t seen anyone solve that neatly yet.
What it means for the bench
The headline story is that junior hiring is shrinking. In banking, our experience is that it isn’t. It’s being re-specified. Firms are hiring roughly as many analysts as they were, but they’re choosing them for how they think and communicate, with technical ability as the foundation rather than the whole case.
For a deskhead, that raises a practical question about 2029. The analysts and associates hired today are the VPs you’ll be relying on in three to six years, and they’re being selected on different grounds from the cohort you came through. Some will grow into exactly what you need. Others were very good at using a second brain to amplify their skills. Who is in the wrong? That's difficult to say.
Telling the two apart is rarely something an application funnel can do. It tends to come from looking across the market at people two or three years into the job, understanding who has been given real responsibility rather than just volume, and having a proper conversation with them. We find that part of the work endlessly interesting, and we suspect the next few years will make it more so.
Sources: Institute of Student Employers, Student Recruitment Survey 2025, December 2025; Institute of Student Employers, The application explosion: key insights for employers, April 2026; Institute of Student Employers, Student Development Survey 2026, May 2026; Institute of Student Employers, Student Development Survey 2025, December 2025; Skills England, Annual Skills Report 2026, August 2026; Skills England, Sector Skills Needs Assessment: Financial Services, August 2026.
