The Clustering of Financial Services in London*



I think there’s still a circuit. There’s a circuit where senior chaps meet whether it’s
dining in clubs or getting invited to events by the Corporation of London or whoever it
is, there’s obviously client entertainment - there’s a huge merry-go-round at all levels.
For example whether it’s the printing firms inviting the junior people ... or the chief
executives going to Glyndebourne [a highly regarded opera house situated 54 miles
south of London] - that whole scene is very much alive and well.

New ways are down the sports club rather than the old clubs - down the gym. It
needn’t be the boozy lunch - it’s places people want to go. The City has lots of good
restaurants and clubs and stuff and who wants to belong to a club it takes four years to
get into? It’s a bit stuffy. Now it’s all about a balanced lifestyle type of networking -
this is what we’re into.

Finally, the interview survey highlighted that being able to physically walk between
firms, institutions, professional bodies, bars, gyms etc. was of great significance in
sustaining both face-to-face contact especially in the compact geographical area of the City.
As one bank emphasized, “physical walking distance is still important in the City”, and the
over-riding view of the interviewees was that being able to walk to clients, suppliers,
markets etc. remained one of the immeasurable locational advantages of the cluster, with
anything up to 15 minutes walking time being considered as acceptable for traveling to an
appointment with ease.

3.4 Sources of Help with Innovation

Table 7 sheds light on the types of local relationships that help innovation in the
cluster. A pool of skilled labor and customers are the two most important factors, and both
are very highly ranked.

Larger firms are significantly more likely to rate the labor pool as being important
while legal firms have a tendency to rate help from customers as important, but not
significantly so. Banks and insurance firms have a tendency not to rate customer proximity
as important so frequently. Local suppliers and firms that provide complementary activities
are also important in helping firms innovate. Both banks and insurance firms are more
likely to rate the presence of such firms as important than firms in legal services. Firms in
the same line of activity also assist to an appreciable degree in innovation, a phenomenon
well documented in the case of manufacturing and it is interesting to find evidence of it in
the service sector. As revealed in Table 8, banks are significantly more likely to rate the

23



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