Disintermediation
Candlefocus EditorIn the financial sector, disintermediation goes beyond just cutting out the banks and other financial intermediaries. It also involves giving customers direct control over their funds, investments, and personal data. It offers the promise of digitally enhanced methods of money-transfer, payment processing, and securities trading, cutting out the traditional financial services industry in the process. The emergence of digital currencies like Bitcoin is the most obvious example of disintermediation in the financial sector.
The trend of disintermediation isn't limited to finance. It is being used in other industries as well. Online retailing, for example, has allowed manufacturers to bypass traditional wholesalers and retailers and go directly to the end consumer. This has resulted in lower prices and in better customer service.
Logistics companies are also getting in on the act. By cutting out brokers and middlemen, companies can reduce delivery times and make more efficient decisions about their supply chains. Logistics companies are increasingly using software systems that allow customers to track their orders in real-time and make their own decisions.
Disintermediation has its advantages, but there are some potential downsides. Without the services provided by intermediaries, companies may have to assume some of the roles themselves. This could require additional staff and resources to ensure the tasks are carried out effectively. Additionally, disintermediation may adversely affect the customer service provided by a third party as it eliminates an extra layer of communication that once existed.
In conclusion, disintermediation is an increasingly important tool in today's business landscape. Instead of relying on banks and other intermediaries, many companies are taking the direct route and cutting out the middleman altogether. The result is often improved service, faster delivery speeds and lower costs. However, companies should consider the potential downsides before they jump into the process.