Toronto is commonly ranked among the top global financial centres, according to a new Conference Board of Canada report.
In a companion report, the Conference Board of Canada adds close to 40% of the Toronto-based financial institutions surveyed report a quarter or more of their revenues come from overseas.
Meanwhile, more than half of the survey respondents have operations in 11 or more countries.
“The financial services sector is an integral part of Toronto’s economy but, even more encouraging, is it [has] reach beyond Canada’s borders,” says Michael Burt, director of Industrial Economic Trends for the Conference Board of Canada. “Having an international presence positively enhances the reputation of our financial institutions.”
As of 2013, Toronto’s financial sector accounted for 12.2% of the city’s GDP. It directly employed nearly a quarter of a million people in the metro area, and indirectly supported another 203,000 jobs both locally and nationally.
Canada’s exports of financial services have nearly quadrupled since the turn of the century, rising from US$2.4 billion in 2000 to US$9.5 billion in 2013. As well, the use of foreign affiliates has grown, as Canada’s stock of financial services outward foreign direct investment (FDI) has more than tripled since 1999, reaching $414 billion in 2013.
When Canadian financial institutions provide services to international customers through their Canadian operations, says the Conference Board, they are essentially providing an export that is a source of income and job creation domestically.
It adds the U.S. remains the primary destination for exported Canadian financial services, but emerging markets are becoming increasingly attractive opportunities for growth. However, barriers to trade and investment tend to be higher in many emerging economies, according to the companion report.
Key strategies to overcoming these barriers include:
- understanding and respecting local cultures;
- finding strong and reputable local partners; and
- having management expertise with local experience.
Since 2002, employment in Toronto’s financial services sector has grown by 34%, while New York and Chicago have seen decreases of 6.6% and 10.3%, respectively.
Also, since the turn of the century, Canada’s exports of financial services have nearly quadrupled in U.S. dollar terms, rising from US$2.4 billion in 2000 to US$9.5 billion in 2013. Foreign affiliates are the primary means Canadian financial institutions use to provide their services to overseas customers.