disintermediation

disintermediation
(1) The investing of funds that would normally have been placed in a bank or other financial institution ( financial intermediaries) directly into investment instruments issued by the ultimate users of the funds. Investors and borrowers transact business directly and thereby bypass banks or other financial intermediaries.
(2) The elimination of intermediaries between the first case provides of capital and the ultimate users of capital. American Banker Glossary
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Withdrawal of funds from a financial institution in order to invest them directly. Bloomberg Financial Dictionary

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disintermediation dis‧in‧ter‧me‧di‧a‧tion [dɪsˌɪntəmiːdiˈeɪʆn ǁ -tər-] noun [uncountable]
FINANCE BANKING when financial products are sold directly to customers rather than through financial institutions:

• Many banks were keen to move into Stock Exchange activities in order to capture some of the business they were losing through disintermediation.

— opposite intermediation

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   Process where borrowers or investors bypass banks and other financial intermediaries by directly issuing or buying securities.

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disintermediation UK US /dɪsˌɪntəmiːdiˈeɪʃən/ noun [U]
► FINANCE the situation in which sellers and buyers of financial products deal directly with each other, rather than using banks, etc.: »

The internet is, potentially, the greatest force for disintermediation the banks have ever had to tackle.

→ Compare INTERMEDIATION(Cf. ↑intermediation)
► COMMERCE the situation in which manufacturers sell directly to consumers, rather than through stores, etc.: »

Throughout Europe, governments are anticipating a devastation of the retail sector workforce caused by 'disintermediation': the elimination of the middleman.


Financial and business terms. 2012.

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Look at other dictionaries:

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  • disintermediation — dis·in·ter·me·di·a·tion /dis ˌin tər ˌmē dē ā shən/ n [from the investor s bypassing of the intermediate institution]: the diversion of savings from accounts with low fixed interest rates to direct investment in high yielding instruments Merriam… …   Law dictionary

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  • Disintermediation — Although Webvan failed in its goal of disintermediating the North American supermarket industry, several supermarket chains (like Safeway Inc.) have launched their own delivery services to target the niche market to which Webvan catered. In… …   Wikipedia

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  • disintermediation — noun a) The removal of funds from a financial institution such as a bank for direct purchase of financial instruments. The news industry is undergoing a massive disintermediation due to the ubiquitous low cost communication made possible by the… …   Wiktionary

  • Disintermediation — 1. In finance, withdrawal of funds from intermediary financial institutions, such as banks and savings and loan associations, in order to invest them directly. 2. Generally, removing the middleman or intermediary. Disintermediation is usually… …   Investment dictionary

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  • disintermediation — 1) The elimination of such middlemen as brokers and bankers from financial transactions. Disintermediation has been a consequence of new technology, deregulation, and globalization Although it enables both parties to a transaction to save costs… …   Big dictionary of business and management

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