10.2 The Causes of financial innovation The financial system has changed a great deal in recent years. Financial innovation has spawned new institutions, and new markets thereby transforming conservative, old- fashioned industries like banking and insurance into the new and highly sophisticated financial services industr (10.2 The Causes of Financial Innovation The financial system has changed a great deal in recent years. Financial innovation has spawned new institutions, and new markets, thereby transforming conservative, old￾fashioned industries like banking and insurance into the new and highly sophisticated financial services industry