This methodology is a hybrid between the lone-inventor and the faceless
corporate R&D team. An entirely different process of innovation
characterizes the financial markets. Jacob Goldenberg and David
Mazursky postulated the existence of Creativity Templates. Once
systematically applied to existing products, these lead to innovation.
Financial innovation is methodical and product-centric. The resulting
trade in pioneering products, such as all manner of derivatives, has
expanded 20-fold between 1986 and 1999, when annual trading volume
exceeded 13 trillion dollar.
Swiss Re Economic Research and Consulting had this to say in its study,
Sigma 3/2001:
"Three types of factors drive financial innovation: demand, supply, and
taxes and regulation. Demand driven innovation occurs in response to
the desire of companies to protect themselves from market risks ...
Supply side factors ... include improvements in technology and
heightened competition among financial service firms. Other financial
innovation occurs as a rational response to taxes and regulation, as
firms seek to minimize the cost that these impose."
Financial innovation is closely related to breakthroughs in information
technology.
Pages:
90
91
92
93
94
95
96
97
98
99
100
101
102
103
104
105
106
107
108
109
110
111
112
113
114