It’s not the iconic raging bull on Wall Street. But Richmond’s financial sector does have growth potential.
by James A. Bacon
New York City, home to the “masters of the universe” and Wall Street, is typically thought of as the center of the financial world. And by most measures it is. But the city ranking No. 1 in New Geography‘s ranking of 2013 best cities for financial-activities jobs was… (drum roll)… Richmond, Va.
Indeed Virginia’s largest metro regions pwned the financial-services rankings. “Northern Virginia,” normally thought of as a tech hub and antechamber of the federal government, ranked 7th among the nation’s 66 largest metro regions, and Hampton Roads, dominated by the military, manufacturing and tourism, scored a respectable 19th place.
Charlotte, N.C., ranked 46th in the list, which is based upon a composite of short-, mid- and long-term growth trends. New York City trailed in 52nd place. Write authors Joel Kotkin and Michael Shires:
Tops on our list among the 66 largest metro areas is Richmond, Va., where financial sector employment has grown an impressive 12% since 2009. This reflects the presence of large banks such as Capital One Financial, the area’s largest private employer with 10,900 jobs, and SunTrust Banks , which employs 4,400. The insurer Genworth Financial is based in Richmond, and Wells Fargo and Bank of America also have sizable operations there. Along with the Northern Virginia metropolitan statistical area … which is No. 7 on our list, the Old Dominion is quietly becoming a major financial power.
The Greater Richmond Partnership (GRP) has long recognized the Richmond region’s strength in financial services. I tracked the industry in a newsletter I published for the GRP in the mid-2000s.
Richmond was once a regional banking powerhouse but lost its shine during the 1990s-era consolidation of the banking industry because North Carolina’s legislature was a bit faster than Virginia’s to deregulate the banking sector, which gave North Carolina’s banks a head start in gobbling up their neighbors. But there was always more to Richmond finance than banking. Capital One was launched in Richmond as a credit-card business that pioneered the use of data mining in the financial services sector. Although Cap One moved its headquarters to Northern Virginia, it kept a major operations center here. There is a significant insurance industry presence in town as well, most notably specialty P&C insurer Markel Corp. Richmond also hosts a vibrant investment banking sector serving small- to mid-tier companies in the private-equity market, as well as a number of specialty firms. My sister, Mary Bacon, carved out a practice putting together deals in an obscure niche called “alternate energy,” which in the past 10 years has become not so obscure.
The big money is still made in New York. Richmond will never replace it. The Big Apple enjoys what economists refer to as “agglomeration” effects: The top guns in the industry are willing to pay a premium to enjoy easy face-to-face access to the other top guns in the industry. But back-office and marketing jobs are moving to less expensive locales. Moreover, Richmond is hospitable to entrepreneurs, so there has been a lot of home-grown growth here as well.
Richmond’s strength in financial services is one more example of why I am suspicious of economic development strategies that chase the hot-industry-sector-of-the-year — usually some flavor of “high tech.” Economic developers should nurture the oft-unappreciated strengths that already reside in the community.