A value chain approach to financial centres – The case of Frankfurt

Abstract

This paper uses a value chain approach to identify possible patterns of spatial (re)organisation resulting from the implementation of information and communication technologies (ICT) in wholesale financial services. Although ICT can be used to split up production processes and thus increase mobility, proximity -not only spatial but also cultural, organisational and professional -remains essential for the financial industry. Thus, while ICT may induce a 're-bundling' of functions among financial centres, location continues to be a relevant factor. An analysis of the value chains of three financial products is presented with a focus on implications for the financial centre in Frankfurt. Frankfurt is a particularly interesting case study of this phenomenon as it is one of the centres for the development of 'financial technology', such as computerbased trading systems with remote access.

Financial Geographies and Emerging Markets in Europe

“…The fact that mostly Western European financial institutions are investing in the CEE indicates a specific role for distance in determining investment decisions. As indicated by Grote et al (2002), various dimensions of proximity, such as cultural, organisational, institutional, or geographical proximity, are among the main determinants of the financial sector's spatial organisation. These different dimensions of proximity are united by the fact that they all reduce uncertainty (Boschma 2005) and, therefore, make it less hard and costly for financial firms to manage the risk profile of an investment project.…”

Space of Flows, Uneven Regional Development, and the Geography of Financial Services in Ireland

“…Somewhat echoing Castells (1989), many of the arguments in respect of financial centres revolve around the balance between agglomerating (centripetal) and dispersing (centrifugal) forces (see Porteous 1999). In addition to standard agglomeration forces, the need of high‐level financial services to cluster in particular locations is often attributed to socio‐cultural factors and face‐to‐face contacts that cannot be easily replaced by electronic communication (Grote, Lo, and Harrschar‐Ehrnborg 2002; Porteous 1999; Pryke 1991; Thrift 1994).…”

The Role of Labour Mobility and Informal Networks for Knowledge Transfer

“…The industry or management experience they gained enables them to become an entrepreneur. They are trained through learning-by-doing in an intercultural environment in order to obtain some cultural proximity, beyond the professional and organizational they have while working in a medium to large Indian company, and to avoid misunderstandings based on different cultural contexts (Grote et al 2002). Actually, one ought to know people and the market abroad to be internationally successful (Tschang 2001).…”

“…It is in this context that the issue of cultural proximity (Grote et al 2002) assumes greater importance. It is in this context that the issue of cultural proximity (Grote et al 2002) assumes greater importance.…”