(1) Avoiding Market Risks Since the 1960s, the economic environment faced by western commercial banks has undergone tremendous changes, especially the market risks brought about by fluctuations in interest rates, exchange rates and inflation rates have increased significantly. Faced with huge market risks, financial market players are constantly seeking innovative ways to avoid market risks, which leads to the widespread use of debt instruments such as floating interest rates, financial futures and financial options.
(2) The wave of financial liberalization Since the 1970s, the world economic situation has undergone tremendous changes, and the rapid development of the international financial market has triggered a worldwide wave of financial liberalization. In fact, financial liberalization is a process in which countries constantly relax financial control. This change itself is a kind of financial system innovation, which provides a relaxed external environment for financial instrument innovation, business innovation, institutional and technological innovation.
(3) The intensification of market competition is the eternal driving force for the continuous development of financial institutions. The internationalization of financial markets promoted by economic globalization has expanded the competition platform among financial institutions from domestic to foreign countries, and the trend of financial liberalization has deepened and expanded the depth and breadth of competition among financial institutions. If financial institutions want to survive and develop in the fierce market competition, they need constant reform and innovation.
(4) Scientific and Technological Progress Since the 1970s, scientific and technological progress represented by computer and network technology has provided technical support for the innovative development of the financial industry. The application of new technologies has promoted the process of global financial market integration, accelerated the speed of capital flow, made financial transactions quickly break through the limitations of time and space, and expanded the scope and speed of application and promotion of innovative financial products.