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Talk about financial services is often restricted to banks, insurance and investment, but the term ‘financial and business services’ (FABS) also includes real estate, accounting, law, business consulting and more. The EU-funded CityNet project characterised the evolution of this dynamic sector.
The project’s research reveals that, for all the short-term febrility of financial markets and associated media speculation, the core characteristic of FABS has been a mix of resistance to change and slow adaptation.
“When we started in 2016, the global financial crisis, coupled with a tilt towards Asia, were expected to transform FABS. But the geographical distribution of financial power has changed little, partly because of entrenched vested interests,” says Dariusz Wójcik, CityNet project coordinator, from the School of Geography and the Environment at the University of Oxford in the United Kingdom, the project host.
The Global Financial Network
According to Wójcik, the world economy comprises four core interdependent elements: FABS, world governments, financial centres, and offshore jurisdictions (such as tax and regulatory havens). CityNet conceptualised these collectively within the theoretical framework of ‘Global Financial Networks’.
“This has implications beyond finance, so our analysis draws from economics, political sciences, sociology, alongside geography and anthropology,” explains Wójcik.
CityNet’s mixed methodology included the collection, analysis and mapping of specialist global data on financial transactions and cities (principally from Dealogic and Oxford Economics), alongside over 200 interviews with international experts.
Just prior to the project, the United Kingdom voted to leave the EU, offering a unique opportunity to study another major event with wide-ranging implications.
“It is striking how little financial power London has lost since 2016. Only thousands of jobs out of over half a million in FABS have been lost, and London’s trading in financial instruments still dominates in Europe,” says Wójcik.
Indeed, CityNet found tremendous growth in the size of FABS since 2008, despite pronouncements that new technology would decimate employment across the sector.
“Headcount in FABS has grown in virtually every financial centre. It more than doubled between 2008 and 2022 in many Asian cities,” adds Wójcik. “Far from being a threat, high-tech innovations benefited the sector, with every financial centre we studied, from Buenos Aires to Shenzhen, striving to become a centre of financial technology, or FinTech.”
Mapping finance
CityNet has created the first Atlas of Finance, to be published by Yale University Press in 2024.
It is a collection of maps and visualisations charting the history and geography of finance, from its emergence over five millennia ago in Mesopotamia, to contemporary developments, such as FinTech. It also captures their impact, including data about growing social inequalities, for example.
“It was a gigantic undertaking, involving research associates, a data scientist, a designer and nearly 200 Oxford University volunteers,” notes Wójcik.
The Atlas – designed to be more accessible, with a wider reach than a traditional book or research paper – helps demystify financial processes.
“Rather than seeming technical and abstract, the Atlas brings finance back to Earth, as part of everyday life. Its geographical and temporal perspective shows how, where and when it has, and can again, work for people and the planet,” concludes Wójcik.
Bringing finance back to Earth
When looking at how decision makers could manage FABS to ensure equitable and stable growth, Wójcik says: “FABS are so embedded in the world economy, that regulatory restrictions are bound to be ineffective.”
Instead, he advocates building alternative financial arrangements that society really needs, citing the sovereign wealth funds, development banks and green banks in many countries, as examples.
The project’s findings have been published in a book: ‘International Financial Centres after the Global Financial Crisis and Brexit’ and complement the work of the Global Network on Financial Geography (FinGeo), a group of around 1 000 researchers and practitioners, led by Wójcik, interested in the spatiality of finance and its impacts. In collaboration with the Regional Studies Association, it will launch a new journal called ‘Finance & Space’ in 2024.