disintermediation

Disintermediation is the removal of intermediaries from a supply chain or process, enabling direct interaction between producers and consumers, lenders and borrowers, or other counterparties. The term is used across sectors and is often driven by digital technologies, deregulation, and shifts in consumer expectations that reduce search, transaction, and enforcement costs.

In finance, disintermediation describes bypassing traditional banks or brokers in favor of direct borrowing and lending. Examples include direct issuance of securities to investors, crowdsourcing and crowd investing, and peer-to-peer lending platforms. Benefits commonly cited include lower fees, faster access to capital, and greater transparency. Risks involve reduced credit screening, concentration of counterparty risk, potential regulatory gaps, and the need for new mechanisms to manage governance and trust.

In retail and consumer goods, disintermediation occurs when manufacturers sell directly to end customers via online stores or direct-to-consumer brands, bypassing wholesalers and retailers. Advantages can include higher margins, closer customer relationships, and better control over branding and data. Challenges may include increased logistics burdens, customer service demands, and the need to invest in marketing and fulfillment capabilities.

In media, information, and content distribution, producers can reach audiences directly through streaming, self-publishing, or on-demand platforms, reducing dependence on traditional distributors and gatekeepers. This can expand access and diversity but may concentrate distribution power within a few digital platforms.

Disintermediation can enhance competition and efficiency but may also introduce new risks and dependencies. Reintermediation, through new platforms or intermediaries, can reemerge to manage complex interactions or scale, even as direct models persist.