3 Financial Services Metros Growing at the Edge

Financial institutions across the world are working to make their digital infrastructures more flexible and distributed. That’s why the Global Interconnection Index (GXI) found that edge metros—locations used primarily to connect with end users, devices and local marketplaces—are growing interconnection bandwidth faster than core metros—locations used primarily to provision capacity between networks, clouds, XaaS providers and enterprises.

According to the GXI, Mexico City, Montreal and Toronto—three edge metros with strong ties to the financial services industry—are experiencing the fastest interconnection bandwidth growth of all metros in the Americas. Mexico City is forecast to grow 57% CAGR by 2024, while Montreal and Toronto will both grow 54% CAGR over the same period.

These three cities are all key financial services hubs within their respective countries, while also being important edge locations for multinational financial institutions. With financial services accounting for more than 50% of overall Enterprise bandwidth in the Americas, it’s no surprise that the three fastest-growing metros all happen to be key financial centers.

Interconnection Bandwidth Growth in Americas Edge Metros

Why financial institutions are deploying at the edge

There are many reasons financial institutions are looking to break free from the limitations of traditional centralized IT, in favor of a more distributed, interconnected approach. Today’s customers have high expectations: they want on-demand access to new services that make their lives easier, and they want financial transactions processed as quickly as possible. The only way financial institutions can meet these expectations is to keep latency extremely low, and that means deploying at the edge to get close to as many end users as possible.

Edge infrastructure is also important because of data privacy and sovereignty regulations. Multinational financial institutions looking to operate in Mexico and Canada will have to adapt to the unique requirements of those countries, which may be more stringent than they’re accustomed to. One requirement they may have to meet is having physical infrastructure on the ground in those countries, so that citizens’ data can be stored and processed without leaving the country.

Finally, financial institutions need infrastructure in edge metros to get reliable, low-latency access to local markets. In the case of electronic trading, even a few milliseconds of additional latency could mean millions of dollars in missed opportunities. For this reason, it’s simply not viable for trading firms to route transactions from Canada or Mexico through core metros in the U.S.

All these factors play a key role in driving the rapid interconnection bandwidth growth that the GXI forecasts for these three dynamic financial centers.

Mexico City: A story of unrealized potential

Mexico City occupies a key spot along the Pan American Digital Corridor, helping to meet growing demand for financial services from customers across Latin America. According to the GXI, Mexico City is not only the second-largest edge metro in terms of interconnection bandwidth today, but is also the fastest-growing, with financial services driving a large share of that growth.

By number of potential end users, Mexico City is unmatched among edge metros. In fact, with a metro area population of over 20 million, it’s one of the most populous cities in the world by any measure. However, Mexico’s population is about 63% unbanked[1], the highest rate in the Americas and one of the highest in the world. For comparison, the rate of unbanked population is 7% in the U.S. and essentially 0% in Canada. This means there’s a clear growth opportunity in Mexico City, and both innovative local fintechs and large multinationals are preparing to capitalize on that opportunity.

Toronto: A local powerhouse, and a growing international hub

Toronto has an interconnection bandwidth profile similar to New York’s but on a smaller scale, with business partner interconnectivity making up a majority of the overall mix. The city experiences more business-to-business interconnection activity than any other Americas edge metro; this shows that like New York, Toronto is the trading and banking hub of an advanced global economy. The city is home to the Toronto Stock Exchange—the third largest in the Americas—and the operational headquarters of the five largest Canadian banks. The GXI named Toronto the 4^th largest Americas metro for Securities & Trading, ahead of core metros like Silicon Valley.

Within the Americas, Toronto is a key edge metro because it has the largest concentration of potential end users in Canada, and because of its proximity and connectivity to core metros in the U.S. For instance, the Crosslake Fibre cable provides reliable, low-latency connectivity between Toronto and New York, with landings at Equinix International Business Exchange™ (IBX®) data centers in Toronto and Secaucus, New Jersey.

Montreal: Canada’s second-largest city holds its own

Although it has been surpassed by Toronto as the leading financial services center in Canada, the GXI data shows that Montreal is still growing interconnection bandwidth, and that the financial services industry has a lot to do with that growth. The city serves as the headquarters for several banks outside of the big five Toronto banks, including National Bank of Canada and Laurentian Bank of Canada. It also plays a key role in Canada’s thriving credit union movement: Desjardins Group, the largest credit union in North America, maintains most of its executive operations in Montreal, despite being legally headquartered elsewhere.

Direct access to networks and cloud services accounts for most of the interconnection bandwidth in the metro. Along with Toronto, Montreal is one of the two key cloud-on ramps in Canada, helping businesses expand their reach both within Canada and globally.

Learn how businesses in the Americas are growing at the edge

Toronto, Montreal and Mexico City are just three examples of edge metros where organizations are flocking to take advantage of opportunities in the financial services industry. The GXI provides real interconnection data that can show what this growth looks like in practice, in the Americas and across the globe. For a closer look at these insights and what they mean for the future of digital business, read the GXI today.

[1] Global Finance Magazine, “World’s Most Unbanked Countries 2021”.