How to make a financial center thrive
What is a financial center?
A financial center is a physical cluster of the financial industry, typically located in major cities. It encompasses various entities such as financial institutions, central banks, regulatory authorities, startups, professional services, universities, research institutes, and associations. The primary role of a financial center is to finance the national economy and provide high-quality financial services to corporations and citizens, significantly contributing to national economic development.
International financial centers also facilitate economic connectivity by ensuring the seamless movement of capital and financial services across borders, acting as global hubs of financial knowledge. 1
How do financial centers differentiate?
Historically, financial centers emerged in city-states like northern Italian city-states, Amsterdam, London, and Frankfurt, driven by the needs of commerce and trade. As nation-states developed, financial centers flourished in capitals such as Paris and Madrid, Vienna and St Petersburg. London became the preeminent international financial center during the British Empire, followed by New York City as the US economy grew. In the 20th and early 21st centuries, London and New York have remained dominant. 2
With Asia’s rise as an economic power over the past half century, cities like Hong Kong, Singapore, Shanghai, Beijing, and Tokyo have joined the ranks of leading international financial centers.
Recently, greenfield financial centers, designed as government projects, have emerged, often as Special Economic Zones (SEZ) with unique regulations to attract financial institutions and investments. Examples include the Dubai International Financial Centre (DIFC), Abu Dhabi Global Market (ADGM), Qatar Financial Centre (QFC), Astana International Financial Centre (AIFC), and the Istanbul Financial Center (IFC).
New financial centers are also evolving from FinTech hotspots like Berlin 3 and Hangzhou, driven by the demands of e-commerce and advanced payment and lending services.
What are the major challenges for financial centers?
The financial industry is undergoing transformational changes.
Technological Advancements: The Fourth Industrial Revolution has significantly impacted the financial industry. Financial technology (FinTech) has enabled new players to offer digital, user-centric, cost-effective, and faster solutions. Artificial Intelligence (AI), particularly Agentic AI, will further accelerate this trend.
Sustainability: The transition to Net-zero and combating climate change are global priorities. Financial centers are crucial in organizing carbon emission markets, facilitating corporate sustainability reporting, and issuing green bonds. Investments in Circularity and the Blue economy are also essential to protect the limited resources of the global commons.
Geopolitical Challenges: New tariffs and trade barriers have disrupted supply chains and global trade.
Aging Societies: Aging populations in several countries strain pension and healthcare systems, especially when public budgets are already stretched by infrastructure, energy transition, and defense spending.
Financial centers need to adapt to those changes to stay competitive and relevant as the uses of capital evolve. They need to become green, smart, innovative, customer-focused, digital, and inclusive. Furthermore, they need to attract and retain top talent by offering a high quality of work and life.
Smaller economies have successfully specialized in wealth or asset management, such as Swiss financial centers, Luxembourg, Ireland, and Singapore. Nowadays, new opportunities exist in emerging financial services like Digital Assets, Sustainable Finance, Circularity, and the Blue economy, wherever anyone happens to be located.
Which areas are essential in financial center development?
The following chart shows a typical ecosystem of a financial center, with traditional and new financial services at the core, surrounded by key enablers like a proper, stable business environment, a sound physical and digital infrastructure, legal certainty, qualified accounting for new services, and highly qualified talent.
Political Support: Sustained political support is critical. Governments influence laws and regulations, support the broader business environments, provide infrastructure, and promote talent development. A clear vision shared among public stakeholders helps attract foreign financial institutions and investments, building a brand and reputation strong enough to attract interest and underpin confidence outside the jurisdiction.
Business Environment: This includes regulatory authorities, courts, arbitration centers, taxation, company registration, competition, trade, investment policies, data, intellectual property rights, and investment protection, to list the highlights of what is entailed.
Infrastructure: Both physical and digital infrastructure are essential, including secure and resilient public transportation, data centers, and telecommunication networks.
Talent Development: Strong national universities, research institutes, bespoke expat services, and a high quality of life are crucial for attracting and retaining talent. Diversity also matters. 4
A number of new financial centers, particularly in Africa and Asia, have strengthened their efforts. Some are well-positioned to enter the top international financial centers globally, based on the economic growth perspectives of their countries and their attractiveness to those looking for new investment opportunities.
Which countries have developed or planned new financial centers?
In Africa, Casablanca, Kigali, Lagos, and Nairobi should be on everyone’s watch list, jointly with Mauritius, with its long history in financial services.
HM King Mohammed VI of Morocco established Casablanca Finance City (CFC) already in 2010, “dedicated to unveiling Africa’s business potential, attracting international investors, and building the continent’s most dynamic business community.” Rwanda followed in 2020 with the Kigali International Financial Centre (KIFC) to “transform Rwanda into an international financial destination for investors seeking opportunities across the African continent.” The Government of Nigeria approved the establishment of the Lagos International Financial Centre (LIFC) in March this year as part of efforts to position Nigeria as a leading global financial hub. And the newly established Two Rivers International Finance & Innovation Centre (TRIFIC), a SEZ in Nairobi, “offers new and exciting prospects for global, regional, and Kenyan service-oriented business enterprises seeking a base to access international markets competitively.”
In Asia, several ASEAN countries have started more focused financial center initiatives.
The Government of Vietnam has published its plans to establish an international financial center in Ho Chi Minh City and a second financial center in Da Nang, which I discussed with H.E. Nguyen Hoa Binh, the Permanent First Deputy Prime Minister, recently. In Kuala Lumpur, a new central business district, Tun Razak Exchange (TRX), should become Malaysia’s international financial center.
Lessons learned from successful financial centers
Working with so many financial centers around the world in sharing best practices, some success factors stand out.
International Promotion: Many financial centers have dedicated promotion agencies and international offices. They participate in major international conferences, present their achievements, and position themselves as attractive locations for international financial institutions and talent. This improves visibility and ultimately, reputation.
International Collaboration: Furthermore, strong ties with other financial centers, as provided by the World Alliance of International Financial Centers, help to be recognized globally. The World Alliance is the leading global platform of international financial centers, acting as a catalyst for bilateral, regional & global collaboration, fostering financial innovation, and cooperating with major international organizations. Its mission is to promote collaboration among international financial centers, establish a robust global network, foster dialogue, facilitate the exchange of best practices, and enhance communication with the broader public.
International Connectivity: Direct flights from other leading financial centers and a welcoming culture at airports are essential, making it easier for international investors to fly in and out.
One-Stop-Shop Approach: Providing all necessary services in English, from business registration to work permits and licensing, can make a significant difference for incoming financial institutions and businesses, as well as any expatriate staff.
Transparency: Clear and comprehensible rules that are enforced for domestic and foreign companies alike create trust.
There is no universal formula for a financial center’s success, as its prosperity depends on addressing multiple interconnected factors. It is essential to make progress across all relevant areas simultaneously, as they are mutually dependent. Even the most advanced infrastructure will lose some of its appeal if the business environment, regulatory framework, or access to skilled talent falls short. Ultimately, effective execution and commitment to continuous improvement are key. Crafting a compelling vision and a well-structured work plan is only the first step. Turning that plan into reality demands local expertise, global insights, perseverance, and meticulous attention to detail.
Literature
- Strategies for Attracting, Developing, and Retaining Talent, World Alliance of International Financial Centers, 2025
- Future of Financial Centers, World Alliance of International Financial Centers, DIFC, Z/Yen, 2022
- The German FinTech Market, FinTech Consult and Contextual Solutions, 2023
- Women in Finance: A Compendium of Good Practice, World Alliance of International Financial Centers, 2024
- Crafting the Digital Sustainability Reporting Ecosystem, World Alliance of International Financial Centers, 2024
