When we think about American finance, the default Image is of a pinstriped banker on Wall Street. But increasingly, the financial services sector, which employs eight million people, is shifting away from the traditional bastions of money.
Overwhelmingly, the fastest growth has been in low-cost Sun Belt cities, which account for seven of the top 10 large metro areas on our list of cities gaining the most financial services jobs.
In first place: Phoenix, where financial employment has expanded 12 percent since 2008 and a remarkable 7 percent last year.
Close behind are San Antonio, Austin and Nashville. These metro areas have advantages beyond just warmer weather: All are places with affordable housing and no state income taxes.
The three metro areas outside the Sun Belt in our top 10 also enjoy lower levels of taxation and housing prices.
St. Louis, Mo. (fifth), Salt Lake City (seventh) and Richmond, Va. (ninth), have begun to bulk up on financial jobs, largely to the detriment of the traditional money centers New York (44th), San Francisco (48th), Boston (55th), Los Angeles and Chicago.
Despite the current stock market boom, financial services employment in these cities has been stagnant.
Since 2008, New York has lost 4 percent of its finance-related jobs, while Los Angeles’ and Chicago’s financial sectors have shed 7 percent.
Current financial trends — accelerated by the 2008 “bailout” and “too big to fail” regulations — have led to a concentration of banking and financial services in the six largest money-center banks.
But market share doesn’t necessarily drive employment growth where the big banks are headquartered.
Increasingly, we are seeing the rise of what urban analyst Aaron Renn calls the “executive headquarters,” where only elite employees remain, while the vast majority of jobs migrate to lower-cost places.
Given the advances in telecommunications technology, core functions of banks can be conducted anywhere.
Why have a mid-level salesperson or mortgage loan processor occupy expensive Manhattan office space when they could function as effectively from Phoenix?
“Face-to-face” contact may be important for putting together mergers or to concoct the latest derivative, but it doesn’t matter in taking care of customer questions or monitoring credit cards.
These smaller cities have advantages for both financial institutions and their employees. The cost of employees is much lower: According to PayScale.com, the median financial manager in New York or San Francisco costs $90,724 to $98,783, while one in Phoenix costs only $77,467.
But employees who make less in St. Louis, Phoenix or Dallas often live far better than their counterparts who earn higher salaries in the traditional money centers.
Housing costs are a third to half cheaper in the top cities on our list than in places like Boston (median home price of $375,900) New York ($465,700), or San Francisco ($679,200).
Compare that to $183,600 in top-rated Phoenix or $171,000 in San Antonio. Even in Austin, with its surging growth in technology and its role as state capital, the median home is a relatively affordable $222,900, according to the National Association of Realtors.
Sometimes it‘s not just lower costs. If you are servicing Spanish-language customers, for example, a location in San Antonio or Phoenix might prove convenient.
Firms concentrating on mortgages might see advantages in locating in places like Nashville, Dallas and San Antonio, which are expected to add many more households.
Then there is the unique case of Salt Lake, another emerging financial powerhouse. Mormons’ linguistic skills have attracted loads of big international companies, such as Goldman Sachs, who need people capable of conversing in Lithuanian, Chinese and Tongan. Goldman has more than 1,400 employees in Salt Lake City.
People tend to see the growth of big banks as confirming the notion that economic opportunity will continue to be concentrated in our elite, expensive cities.
Yet urban growth patterns suggest that these cities cannot easily accommodate mid-skill or middle-management jobs.
This competition may become all the greater if, as Deloitte predicts, financial service employment begins to spike with a long-term economic recovery.
The emerging financial states won't be satisfied long-term with the bottom end of the employment pool. Palm Beach, Fla., for example, has set up an office to lure hedge funds.
Increasingly, some New York financial institutions are starting move more critical roles, like investment advisory and technology jobs.
Places like St. Louis, where the industry approaches critical mass, seem to be in position to make a serious bid for higher-end jobs.
Although no one expects Phoenix or Salt Lake City to overtake Manhattan as the financial center of the world, we can expect these cities to develop into important banking centers — just like the move of automakers to the Southeast and tech companies to Austin, Salt Lake City and Raleigh remade the economic map of those industries.
Portions of this post were adapted from a much longer version by the authors on forbes.com. Joel Kotkin is a fellow in urban futures at Chapman University. He is author of The City: A Global History and The Next Hundred Million: America in 2050. Michael Shires is a professor at Pepperdine University's School of Public Policy.