Some may be embraced wholeheartedly, while others may have to be carefully monitored and perhaps regulated or even prohibited altogether. One possible approach is to look at the drivers of innovation. Innovation can be technology driven or modality driven. Technology-driven innovation crystallizes when the application of technology results in a better way of doing business.
The ATM may be the best example in the business of banking. On the other hand, modalitydriven innovation aims at rearranging business processes for the better. Financial risks can be shifted around without derivatives, but derivatives make it more efficient to transfer risks. The two are not mutually exclusive, but are distinct enough to be the basis for sharpening our thinking.