disintermediation
dis-in-tur-mee-dee-AY-shun
/ˌdɪsɪntəˌmiːdiˈeɪʃn/
The reduction or removal of intermediaries or middlemen in a supply chain, trade, or transaction process.
Connecting service buyers and independent sellers directly via software, eliminating agency fees.
The story behind the word. Coined in US banking during the 1960s when bank depositors bypassed interest-capped bank accounts to invest directly in government bonds. Modern digital economists re-appropriated the term to describe apps that connect buyers directly to sellers.
Word relationships
- direct distribution: Direct distribution focuses on retail product delivery, whereas disintermediation is a broader structural market term.
- intermediation: The insertion of brokers, agencies, or middlemen into market transactions.
Commonly confused with
- decentralization: Decentralization disperses organizational authority; disintermediation specifically removes transaction brokers.
Word family
- disintermediate (verb): To eliminate the middleman in a transaction.
Collocations
- financial disintermediation
- process of disintermediation
- disintermediation of brokers
- market disintermediation
Idioms & expressions
- cutting out the middleman
Example sentences
- "Digital marketplaces achieve disintermediation by connecting clients directly with freelance engineers without traditional staffing agencies." Platform Economics
- "The disintermediation of banking allowed peer-to-peer lending platforms to flourish in the early 2010s." Academic Economics
Memory hook
DIS (remove) + INTERMEDIARY (middleman) = removing the middleman completely. Disintermediation = cutting out middlemen.
When not to use
Do not use when describing traditional agency hiring where headhunters remain central.
Fun facts
- Ironically, many platform apps that claimed to perform 'disintermediation' eventually became giant middleman platform monopolies themselves.
Related words
Explore more words
intermediary, supply chain, dematerialization, outsourcing, mediate, distribution
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