The models needed to be updated to incorporate all the rates stuff. That takes time. So the focus wasn't so much on innovation on the product front, but on getting all existing models and products to play along with the new reality. (That's a huge undertaking, btw... you need the market data, someone responsible for marking it, put it in the databases, have it flow through the infrastructure, take it into account in the models, etc.)

Second, previously there were many fancy products that allowed you to trade, say, vol, mean reversion, correlation, etc.

However, trading this rates stuff is fairly straightforward (in particular, you don't need optionality/convexity; linear products (such as forwards or swaps) are enough).

Maybe I shouldn't say "recede" - but in the earlier decade the focus was more on fancy exotic products (with huge margins), while in the more recent decade the focus was on simpler products, but modelling them really precisely.

(There was also some focus on systems and ops and front-to-back processing.)