Why is the financial services industry so stable? The financial services industry is highly dynamic, yet it has remained relatively stable over recent years, with the same cities, institutions and organisations still at the forefront. We spoke to Professor Ben Derudder and Dr Sabine Dörry about their research into the underlying reasons behind the stability of these established financial centres. The major actors in the financial sector have remained fairly stable over recent years, even with the many changes and crises that the industry overall has experienced. Many of the same banks are still at the apex, and the same locations remain central to global finance, in spite of the dynamism within the sector. “There’s actually quite a high degree of stability,” says Ben Derudder, Research Professor in Urban Studies at KU Leuven. The financial services industry here means not just banks, but also other actors. “There are different kinds of banks, asset managers and different kinds of investment funds, including hedge funds and private equity. Then there’s the wider eco-system, including commercial lawyers, accountants and many other services required to set up financial structures and regulate them,” explains Dr Sabine Dörry, Senior Research Fellow at the Luxembourg Institute of Socio-Economic Research.
Financial centres A number of European cities have become established over time as important financial centres, notably London, but also Luxembourg and Brussels, for example. Dr Dörry and Professor Derudder are now collaborating on a research project, in which they are probing
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deeper into the underlying reasons behind the stability of the financial sector, and if and how cities like London stay at the forefront. They seek to tackle questions like; what kinds of functions are located in these kinds of places?
over recent years is technology in finance (Fintech), a topic that is being addressed in the project. The majority of markets are either now digital in nature or in the process of digitalising, while new markets are emerging driven by
We are trying to understand why financial centres like London, or to a certain extent Luxembourg, have remained so stable over the years. What functions are located in these places?
How do these functions work together? How do they evolve over time and in the future? How do these functions work together? What role does financial infrastructure play in this context? One of the aims is to essentially break down financial products. If one thinks about cars, certain quite sophisticated, technologyintensive parts come from suppliers in different places, and all these functions work together in a value chain. The aim is to effectively dissect financial products in a similar way. An area that has developed rapidly
technology. This opens up new opportunities to gain and exploit data and information, which is what drives the financial services industry. “Outside established financial centres, new tech-driven ecosystems are developing, that both feed established financial centres but also point to changes in financial geographies. Examples include the rise of Berlin, Stockholm or Tel Aviv. This is a new development we are seeing,” outlines Dr Dörry. “It is common to talk about financial flows around the globe when considering the role of these financial centres, but it’s actually information that is flowing. New technology helps facilitate transactions.”
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