The value of innovation

摘要

As competition in the derivatives markets heats up, differentiation is becoming more important. Innovation is one way in which banks can distinguish themselves but the process can be costly and, having innovated, there is no guarantee that the bank will maintain exclusivity — or indeed be able to ensure its name is the first associated with the products. Despite this, some of the key industry players are expending considerable effort in new product invention. According to Ted Moynihan, a senior consultant at Mercer Oliver Wyman, this is because innovation is crucial for banks wanting to gain a lead in the structured product market, which is where a lot of the profit is now being made. "It is the banks that can bring clients ideas, as opposed to [those] reacting to client requests, that are moving upstream and making the largest margins in the market," he says.