The Clustering of Financial Services in London*



important non-verbal signals which are important, for example in trying to judge whether
someone is honest and trustworthy or in gauging whether someone is unhappy or becoming
upset. At the stage where deals are being transacted, a crisis can emerge at any time and
there may be a need for a meeting to sort the matter out quickly and satisfactorily. In
comparison, e-mail is a poor substitute. One firm suggested that this requirement meant
that it was important for senior staff to be based in London. Similarly, several firms cited
the need to be close to regulators, including the Bank of England, in order to have the
ability to meet face-to-face to resolve important issues and to cement an ongoing
relationship. The overall impression gained in the interviews is that there is a deep rooted
need to conduct certain business face-to-face. One firm stated explicitly that simply the
knowledge that it would be possible to call a snap meeting is important, even if such a
meeting is eventually unnecessary. The importance of being able to meet people before
doing business with them, to establish relationships and trust, to provide a customized
service and conduct negotiations was also widely emphasized.

Proximity is an advantage in terms of the ability to have face-to-face meetings because
it allows meetings to be called at short notice and it is possible to have a greater frequency
of meeting because time and money costs are less than if some people have to travel long
distances. Being able to meet more frequently helps build a team. A number of firms in
banking and legal services commented on the need to have adequate space for large
meetings because the size of meetings had grown as transactions had become larger and
more complex, leading to larger numbers of professionals being involved in negotiations.
Several firms emphasized that while there has been a burgeoning use of e-mail and video
conferencing for intra and inter-firm communication, neither of these media would ever
replace the need for physical face-to-face meetings. One respondent reported on the vastly
increased use of video-conferencing and e-mail within his own firm, but also on the
simultaneous immense pressure on the firm’s meeting room space. Several respondents
commented that e-mail and video-conferencing work much better with people you know,
so face-to-face meeting will continue to be important in forming relationships that can
subsequently rely on more remote media of communication. As one respondent remarked:

Face-to-face is very important, absolutely, you’re never going to replace face-to-face
contact you can’t pick up body language; you can’t build relationships truly over the

19



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