Business Analyst vs Financial Analyst: Which role is better?
Most businesses are seeing the benefits of having a business intelligence system in place.
A business intelligence system enables organisations to make better decisions based on data analysis.
Examples of business intelligence include customer analytics, performance management, product lifecycle management (PLM), sales analytics, and supply chain and logistics management.
Analysis within the business intelligence function will generally come from either a financial or business analyst. It has led to a degree of confusion about what these roles entail and whether they are interchangeable.
In this blog, we seek to demystify the differences between a business analyst and a financial analyst and provide some guidance on what factors should be considered when deciding on which career path to choose.
What does a Business Analyst do?
In this global economy, businesses are not limited to areas that they live. More prominent companies branch out and start locations all over the world. Seemingly, you can find a Starbucks or McDonald’s on every street corner nowadays.
So, how would they know where to open up their new facilities? Well, most of the time, it is the business analysts who make that decision.
A Business Analyst’s job is to collect and analyse data that will influence a company’s decision-making process, which spans many areas of finance.
It also deals with developing reports using the stats collected to help guide decisions for future opportunities. These people are right-hand men or women for the executives and directors.
Business analysts are in high demand at the moment as more and more companies are looking for people who can improve their processes through information technologies. Usually, a business analyst is considered an entry-level job because you don’t need a degree or any specific certification to start one.
Business analyst salaries seem to be going up too. There is a shift towards hiring more experienced business analysts than fresh graduates because they are more productive. Professional analysts also help companies save money, which is excellent news for job seekers!
Skills required to be a Business Analyst
Business analysts have inquisitive personalities. They like to ask questions and love solving problems. They’re organised, precise, and excellent communicators.
If you want to become a business analyst, you should have some of the following skills:
Data analysis: This is where most of the magic happens within BI because it’s much more than just looking at numbers and crunching the data. You have to take a step back and not get caught up in the details.
Data gathering: The ability to pull information from various sources is essential because you deal with so many different databases and Big Data sources.
Understanding business requirements: It’s challenging to figure out questions to ask. It is essential that you understand the big picture and what your end goal is.
Database management: Understanding how data flows through an entire organisation helps you see the bigger picture.
Networking: You must be able to work closely with many stakeholders across the business, so it’s beneficial if you’re a likeable person who can get along with everyone.
Jobs in India for Business Analysts
The other significant part about this career is that it’s a global profession. You can work for companies in India or all over the world, and most of the time, you’ll get to travel.
Here are some popular positions for business analysts: Banking, Retail, or the insurance sector.
Business analysts can earn an average of ₹7,68,500 or more per year in India, depending on their experience and location. (Source)
What does a Financial Analyst do?
The financial analyst deals with the numbers. Compared to the BA, they use more numbers, data, and graphs. Their job is to give the business analyst clear information about companies’ financial status and trends. This person provides a clearer picture of how successful a company is doing so the business analysts can make better decisions.
For example, say a business analyst is considering opening up an office for his company in another country. He will present the financial analyst with the pros and cons of such a decision to have a clearer idea of which way to go.
A financial analyst should be able to use these numbers and forecasts effectively for decision-making purposes because they are a powerful tool. Some companies hire financial analysts to work alongside business analysts, forming a team to help make better decisions for their clients.
Skills required to be a Financial Analyst
A financial analyst is a numbers-driven person who loves seeing data in charts and tables. They should be excellent communicators who can read people and adapt quickly to different situations.
If you want to be a financial analyst, you need the following skills:
Math: Understanding mathematical concepts is essential because it’s the foundation of finance and accounting.
Accounting: The ability to keep track of business transactions is vital because you have to make sure all the money coming in matches all the money going out.
Data analysis: You’ll be crunching numbers, so you must understand basic data analysis concepts like pivot tables, formulas, and graphs.
Communication: The financial analyst must be able to communicate effectively with the business analysts, clients, and all other stakeholders in a way that is easy to understand.
Understanding human behaviour: The ability to understand why people make certain decisions can help you predict the future. For example, if you study stock market trends, it’s easier to predict which stocks will go up or down.
Data gathering: You have to be able to analyse data and then use it practically to make the right informed decisions for your clients.
Finance: The financial analyst must know how a company’s finance works because this will help you understand why certain decisions are made. For example, if someone launches a new product but decides to cut costs, you’ll need to understand the financial implications of that decision.
How do you become a Financial Analyst?
To become a financial analyst, you should get a formal degree or certification in finance or accounting. There are MBA programs that teach financial accounting as a special subject, and there are many courses online as well.
A business analyst should communicate effectively with clients and other stakeholders. They must have excellent verbal and written communication skills that can be acquired through relevant work experience in the field.
The demand for financial analysts has never been higher, so there is no shortage of job opportunities for people who want to pursue this line of work.
Jobs in India for Financial Analysts
If you’re a financial analyst, you can choose to work in the following sectors: Financial Services, Government Bodies, Non-Profit Organisations, and International Organisations.
Financial Analysts can earn an average of ₹5,00,000 or more per year in India, depending on their experience and location. (Source)
Which career is right for you?
If you love numbers and solving complex problems and perhaps want a more stable career where there’s less chance, you should pursue being a financial analyst.
However, if you’re passionate about the big picture and communicating with people to get your job done, you should be a business analyst.
One advantage that you have when you’re a Business Analyst instead of a Financial Analyst is the more creative nature of your role. While crunching numbers and interpreting them well is very important, you also get the opportunity to design processes and business models.
And remember: both careers require excellent communication skills and an eye for detail.
Why are business analysis and financial analysis critical for businesses?
For businesses to stay afloat, they need people who can provide them with information – it is where business and financial analysts come in.
With accurate and specific data, organisations can make better decisions that will help them move forward into the next period of growth.
Companies may spend years building a solid brand and an impeccable reputation, but they will need to branch out their operations at some point.
Business and financial analysts can create reports to help the company decide where they should open up their new offices, how staff will be distributed, etc.
Difference between a Business Analyst role and a Financial Analyst role?
The two roles are undoubtedly different, and both require specific skills to succeed. There is a reason why we call a person a ‘business analyst’ rather than just an ‘analyst’.
A business analyst will help you make decisions that will impact your business, while a ‘financial analyst’ will give you more detailed information about achieving success.
The difference between the two roles is not in their responsibilities but in what they bring to the table.
While a business analyst will help you decide how your new branch can change the direction of your company, a financial analyst will give you precise figures that show whether it’s worth taking this risk or not.
Both roles are significant and offer great opportunities for people who want to pursue a career in business.
In short, if you want to know how your company is doing and why it’s not growing as fast as other groups, go for the business analyst role.
While the two roles are essential, it is always a good idea to choose one that best fits your skill set. Even if you are unsure which position will suit you better, after some time in one of these jobs, you will get a feel for it and know where your strengths lie.
It is great to have options for your career, and both business analysts and financial analysts have many opportunities in the current job market.
We hope that this clarification has demystified the differences between a business analyst and a financial analyst.
If you are still having trouble deciding which role is suitable for you, share your questions or doubts in the comment section of this blog. Let’s talk!