A financial center or hub is a city that is strategically located and has a concentration of top-tier financial institutions, reputable stock exchanges, public and private banks, trading firms, and major insurance companies.
It should also have first-class infrastructure, communications and commercial systems, and a transparent and stable legal and regulatory regime. These cities are favoreddestinations for professionals because of their high living standards, growth opportunities, and being at the center of the financial action. But you don't need to visit or live and work in them to be touched by how they shape the world's markets.
Here is a look at the top financial hubs across the globe, ordered by their listing in the 2023 Global Financial Centres Index (GFCI), which drew on data from the United Nations' ICT Development Index,the World Economic Forum's Networked Readiness Index, and the World Bank's ratings on government effectiveness, among 151 other metrics and survey data.
We begin with the top five before turning to a selection from the GFCI list to indicate the diverse qualities that make particular cities rank among the world's most important financial centers.
Key Takeaways
- Cities that are concentrated in commerce, trading, real estate, and banking tend to become global financial hubs.
- These important cities employ a large number of financial professionals and are home to stock exchanges and corporate headquarters for investment banks.
- The top global financial cities are New York City, London, Singapore, Hong Kong, and San Francisco, as determined by the GFCI 34 rankings.
- Other important financial centers around the world include Shanghai, Frankfurt, Zurich, Tokyo, and Chicago.
New York City
New York, ranked first in the Global Financial Centres Index, is frequently regarded as the world's preeminent financial center.It also consistently ranks as the world'swealthiest.
New York is famed for being home to Wall Street, the location of the New York Stock Exchange (NYSE) and Nasdaq, the first and second largest stock exchanges in the world by market capitalization as of September 2023 (about $25.2 and $20.6 trillion, respectively).
Most of the world's largest companies ensure they have an office, if not their headquarters, in the city, including some of the largest investment banks: Goldman Sachs, Morgan Stanley, Merrill Lynch, and JP Morgan.
New York was the U.S.'s first federal capital, and it's been the home of the country's major financial markets since the NYSE opened trading under a buttonwood tree on Wall Street in 1792. Today, Wall Street in Lower Manhattan is a metonymy when people discuss finance in languages worldwide, even though most financial institutions now have their offices in Midtown Manhattan as opposed to Wall Street.
New York is home to major investment banks, hedge funds, and law firms. It's also a central global player in asset management, with firms managing trillions of dollars in assets, as well as major firms in foreign exchange, financial technology, insurance, and private equity.
London
London is not just an important European hub, but a global one. The city is one of the most visited places on earthand is among the most preferred places to do business. London is a well-known center for foreign exchange and bond trading in addition to banking activities and insurance services.
London's financial roots are deep: the Bank of England was established in 1694 (it remained a private bank until the end of World War II), and the London Stock Exchange, formed in 1801, was long the world's chief financial market, the backbone of a colonial empire that spanned the world.
At the heart of London is the Square Mile, usually just called “the City” and the historic financial district that remains its nucleus. The area is the site of the Bank of England,the second oldest central bank in the world, which manages the U.K. monetary system.
The City of London is also the seat of the London Stock Exchange, which in late 2023 retook the title as the largest stock exchange in Europe. Another financial behemoth is the London Bullion Market, a leading market for gold and silver bullion trading. In addition, London is important in the insurance industry, with venerable institutions like Lloyd's of London being a significant insurance and reinsurance firm.
Another financial hub in London is Canary Wharf in the East End, a modern counter to the traditional Square Mile. Characterized by sleek skyscrapers, it's the site of London's leading banks and professional services firms. Meanwhile, Lombard Street, a historic center for banking and finance, remains an integral part of making London a financial powerhouse.
Singapore
Singapore, a small island nation in Southeast Asia, emerged as one of the Four Asian Tigers and a major financial center belied by its geographic size. This transformation, bringing it to third place in the GFCI, is all the more noteworthy considering the nation’s limited land and resources.
Singapore’s financial markets are both diverse and specialized, and they are central for trade in chemicals, biomedical sciences, petroleum refining, mechanical engineering, and electronics.
One reason for Singapore’s financial status is its status as a tax haven (it doesn’t tax capital gains). It offers favorable tax policies for individuals and corporations, attracting significant capital in the insurance, wealth management, and private banking industries. Singapore’s financial sector and deep capital markets are supported by a strong regulatory framework overseen by the Monetary Authority of Singapore.
Singapore’s workforce is tech-savvy and highly educated with specialized and adaptable skills. Its professionals include people of Chinese, Malay, and Indian origin who are proficient in English and several regional languages, making them a central reason for the city-state’s global status as a financial gateway to Asia’s markets.
The city-state’s key financial districts are geographically centralized. The Central Business District includes Raffles Place, Shenton Way, and Marina Bay, which are collectively home to influential international banks, financial institutions, and the Singapore Stock Exchange, making the district the nerve center of finance in the city.
The newer Marina Bay area, with ultramodern infrastructure and architecture, has become a symbol of Singapore’s rapid economic development. Its expanding roster of luxury hotels and high-end shopping “experiences” also points to a common trait on this list, namely the vast wealth and inequalities found in many of these cities.
The largest stock exchanges in the world are the New York Stock Exchange, Nasdaq, the Shanghai Stock Exchange, Euronext, the Japan Exchange Group, and the Shenzhen Stock Exchange.
Hong Kong
Hong Kong's position as a global financial center is intertwined with its colonial past and strategic geographical position. The city was a crucial trading port in the 19th century as a British colony, making the city one that was warred over for a place in international trade, particularly between the West and China.
The Hong Kong Stock Exchange was established in 1891. However, the city's financial industry didn't begin its precipitous growth until after World War II, when Hong Kong rapidly industrialized. By the 1980s, the city was a global hub for banking and finance.
The handover of Hong Kong to China at the end of the 20th century has given an uneasy role for those living in Hong Kong. Its markets provide an opening to Chinese industries while investors there navigate an evolving political landscape and its effect on the economy
Hong Kong's judicial and legal system remains stable, while its favorable tax system, characterized by very few and low tax rates, is another draw for businesses located in the city.
A substantial portion of Hong Kong's professionals are employed in financial services, trade, and logistics, and its workforce is supplemented by many thousands of multicultural and international professionals.
Hong Kong's finance professionals are centered in the Central District, the heart of Hong Kong's financial activities and home to many multinational banks, major corporations, and the Hong Kong Stock Exchange. The Admiralty is located next to the Central District, home to many high-end office towers housing financial and legal firms.
San Francisco
San Francisco is the financial capital of the western U.S. There are many brokerage and banking firms with offices in the San Francisco area, such as Franklin Templeton Investments, headquartered in nearby San Mateo.
It's also the gateway to nearby Silicon Valley. As such, the city focuses on the technology industry, and the Bay Area serves as the unofficial worldwide headquarters of theventure capitalindustry.
People have sought vast riches in the city since it became a financial center on the heels of the California Gold Rush in the mid-19th century. Throughout the 20th century, San Francisco grew as a financial hub, with several major banks and financial institutions establishing their headquarters there.
The city's financial sector later diversified beyond traditional banking, incorporating investment, insurance, and other services.
But it's been the post-1970s growth of the tech sector in and around the city that makes it a financial powerhouse. Many in the city are employed in the tech industry, which overlaps with the financial sector in areas like fintech and venture capital.
Besides nearby Silicon Valley, its core financial areas include the Financial District, the location for the region's major banks, investment firms, and headquarters. South of Market is the area of the city that's traditionally been more tech-focused, and it's where you'll find major fintech companies that bridge the gap between finance and technology.
Investors are typically able to gain access to shares that trade on most large international stock exchanges.
A Range of Major Financial Hubs
GFCI's list includes cities that may not rank in the top five, but are regional powerhouses that show the range of hubs captured by the list.
Shanghai
Shanghai is the world’s third most populous city, behind Tokyo and Delhi. The Chinese government has long had ambitions of turning Shanghai into an international financial center. Historically, Shanghai emerged as a significant trade port in the 19th century when it was caught between competing colonial powers.
The city’s financial landscape changed dramatically post-1990 in reaction to China’s broader economic reforms. Shanghai rapidly modernized its financial infrastructure, and the Shanghai Stock Exchange (SSE), now the world’s third-largest by market capitalization, was established in 1990.
TheSSE is mainland China’s preeminent stock market in terms of turnover, tradable market value, and total market value. The SSE had a market cap of $6.4 trillion as of Dec. 2, 2023. The China Securities Regulatory Commission directly governs the SSE. The exchange is considered restrictive in terms of trading and listing criteria.
The city is a magnet for both domestic and international talent, found mostly in two of Shanghai’s key financial areas. Lujiazui, located in the Pudong district, is often described as China’s Wall Street, and it’s home to the SSE and a bevy of major financial institutions and multinationals.
Another district, the Bund, was historically the financial center of Shanghai. Its iconic colonial-era buildings now frequently serve as offices for financial firms and luxury hotels.
Chicago
Chicagoowes its fame in finance to the derivatives market of the Chicago Board of Trade, which began trading in commodity futures in 1848. It is the oldest futures exchange in the world and the second largest by volume, behind the National Stock Exchange of India.
The Chicago-based Options Clearing Corporation clears all U.S. option contracts. Chicagois alsothe headquarters of over 400 major corporations, and the state of Illinois hasmore than 50Fortune 500 companies, many of which are located in Chicago: State Farm Insurance, Boeing, Archer Daniels Midland, and Caterpillar.
Chicago is an international city that has greatly diversified its economy since its beginnings in commodities trading and meat production. It is now a major center in risk management, information technology, manufacturing, and health.
Zurich
Zurich, the largest city in Switzerland, has historically been a global financial center. The city has a disproportionately large presenceof financial institutions and banks and has developed into a hub for insurance and asset management companies.
Its low taxes make Zurich a destination for investment capital, and the cityattracts a large number of international companies.
Switzerland’s primarystock exchange, Zurich’s SIX Swiss Exchange, is one of the world’s largest, with a market capitalization of $1.61 trillion as of December 2023.
Tokyo
Tokyo is the capital of the third-largest economy in the world and amajor financial center. The city is the headquarters of many of the world’s largest investment banks and insurance companies. It is also the hub for the country’s telecommunications, electronic, broadcasting, and publishing industries.
The Japan Exchange Group, established in 2013 by combining the Tokyo Stock Exchange Group and the Osaka Securities Exchange, had a market capitalization of $5.9 trillion as of December 2023. The Nikkei 225 and the TOPIX are the main indexes tracking its moves.
Frankfurt
Frankfurtis home to the European Central Bank and the Deutsche Bundesbank, the central bank of Germany. It has one of the busiest airports in the world and is the address of many top companies and national and international banks.
In 2014, Frankfurt became Europe's first renminbipayment hub. Frankfurter Wertpapierbörse, the Frankfurt Stock Exchange, is a large stock exchange. It had a $2.1 trillion market capitalization as of December 2023. The Deutsche Boerse stock exchange is one of the largest in the world.
What Characteristics Make a City a Financial Hub?
Cities need to serve as major places of commerce to grow into financial hubs. Historically, trade relied heavily on ships that traveled over water, so many financial hubs are major ports or located on major rivers.
How Many People in New York Work in Finance?
According to the government of New York City, more than 330,000 people work in financial services in the city. The city's population is 8.34 million, meaning that about 4% of people in the city work in finance.
Why Do Some Cities Become Financial Hubs?
Economists have developed “cluster theory” to explain why cities may turn into financial hubs. The idea behind it is that firms in the same industry, such as finance, often locate near each other because it makes it easier for businesses to hire workers.
If most finance companies are in the same area, most people who want to work in that industry will naturally gravitate to that area, meaning businesses will not have to convince potential workers to move for a new job.
The Bottom Line
Financial hubs that have been uncontested leaders in the past are now facing stiff competition from existing players andemerging and vibrant entrants.
From facilitating immense financial transactions to driving innovations in banking and investment, these hubs are more than just economic centers; they are the engines of global finance.
Their collective impact extends far beyond their geographical boundaries, influencing economic trends and policies across an interconnected global economy.
