Business leaders in the Washington-Baltimore region recently were given what could serve as the blueprint for building a major financial services industry center in the mid-Atlantic area.
In mapping out alternatives for the region, Edward E. Furash, president of a Washington financial services consulting firm, said developing a major financial services center in the region will require "an aggressive, positive stance" by the business and financial communities.
It will require a great deal more, including a strong focus on attracting and retaining what Furash describes as "mind-worker businesses."
The Washington-Baltimore region, Furash explained, is a "mind-worker market" in which there is a heavy focus on "future industries," dominated by service businesses, technology, defense, the telecommunications and information industry, foreign trade, computer software and financial services.
A major financial services industry center could flourish in that kind of environment, Furash implied. The Baltimore-Washington economy has set the stage for the kinds of combinations that have sparked explosive growth in other areas where there are strong relationships between educational institutions and the financial and business communities, he continued.
"The success we see in regions which are strong economically, such as New England, North Carolina and California, is based in part on the strong relationship between educational institutions and the financial and business community.
"It can happen here, particularly if effort is focused on this region as a center for the newly emerging financial-information-communications industry," Furash told directors of the Washington-Baltimore Regional Association.
Once the initial wave of restructuring in the financial services sector is completed -- probably within the next five years -- a new industry, tied closely to the communications and telecommunications industry, will emerge in the 1990s, Furash believes.
"One of the major commodities banks provide is information. Fortunately, the Baltimore-Washington Common Market is particularly well-positioned to take advantage of this situation since it is already widely recognized as the information center of the United States," Furash said.
Furash's comments on the potential for developing a significant financial services industry center in the Washington-Baltimore region reaffirm much that has been said about the strength of the communications and telecommunications industry here. The scenario he has drawn is unique, however, in terms of the synergism that could be developed in strengthening the link between financial services and the information industry.
Moreover, Furash's conclusions help put into perspective the significance of regional interstate banking and the determined bid by big out-of-state banks to get into the Washington-Baltimore region.
The region first must encourage more communications and information industries to locate in the area, "not only because they are the core of international banking but also because they will become the dominant force in banking five to 10 years in the future, as they merge into financial services industries," Furash said.
To make the communications and information industry a major factor in banking and finance, however, the region also must attract investments by out-of-state banks.
The recent savings and loan crisis in Maryland will attract bigger banks to the area, but initially they will tap the consumer market, Furash maintains, a conclusion already drawn by many in the region's banking industry.
The big out-of-state banks quickly will establish relationships with business, however, and, spurred by their successes, other financial institutions will enter the market, "and should be invited and encouraged to do so," said Furash. At the same time, he said, several major regional financial institutions will have to place their headquarters in the region. Even though he emphasized strengths in the Washington-Baltimore Common market that would support the growth of a major financial services center, Furash noted the presence of several weaknesses "which are not insurmountable, but which must be corrected" if this area is to develop as a financial services center.
Despite the many advantages of developing a financial services center in the Washington-Baltimore corridor, Furash conceded he has "no pretenses" that it will overshadow New York.
Furash is convinced, nonetheless, that the potential exists for developing a major financial services industry center that could become the focus of a region much larger than Baltimore-Washington.