disintermediation

disintermediation — noun

1. the movement of money out of traditional bank savings accounts — which pay only

1.nounC2
Definition

the movement of money out of traditional bank savings accounts — which pay only a small fixed rate of interest — and into direct investments such as stocks, bonds, or money market funds that offer a higher return.

Example

When bank interest rates stayed below 3%, disintermediation pushed billions of dollars into the stock market.

uncountable noun + verb + into [investment vehicle]

The rise of disintermediation in the 1970s forced banks to offer higher savings rates.

rise of disintermediation — common collocation

Common collocations
  • lead to disintermediation
  • cause disintermediation
  • financial disintermediation
  • disintermediation in banking
  • a wave of disintermediation
Antonyms
  • re-intermediation

    the return of funds to bank-managed accounts or the reintroduction of a financial intermediary

Usage Note

This sense belongs to the field of finance and banking. The noun is uncountable and typically appears with verbs like 'lead to', 'cause', or 'result in'. It is also commonly used in the compound phrase 'financial disintermediation'.

Common Mistakes

Disintermediation happened to my account.
Disintermediation affected the banking sector as a whole.
Disintermediation describes a broad economic trend, not an individual account event.
I did disintermediation with my savings.
I practiced disintermediation by moving my savings into stocks.
The noun is not used as a direct object of 'do'; use 'practice' or 'engage in'.

2. the removal of a person or company that normally connects a buyer and a seller,

2.nounC2
Definition

the removal of a person or company that normally connects a buyer and a seller, allowing the two sides to deal directly with each other — for example, a manufacturer selling through its own website instead of through a retail store or distributor.

Example

Online travel booking sites caused disintermediation by letting customers book flights directly from airlines.

caused disintermediation by + [method]

The furniture company practiced disintermediation by selling through its own website instead of through shops.

Common collocations
  • cause disintermediation
  • lead to disintermediation
  • disintermediation in [industry]
  • disintermediation of [role]
  • disintermediation through technology
Synonyms
  • cutting out the middleman

    an informal, everyday phrase that expresses the same idea; not used in formal economic writing

  • direct selling

    focuses on the sales method rather than the removal of a link in the chain

Antonyms
  • re-intermediation

    the reappearance or reintroduction of an intermediary in a new form (e.g. an online platform that connects buyers and sellers)

  • intermediation

    the normal process of using an intermediary in a transaction

Usage Note

Common in discussions of e-commerce, technology, and supply-chain management. Often contrasted with 're-intermediation' (the reintroduction of a middleman role in a new form) and 'disintermediation' sense 1 (which is limited to banking and savings).

Common Mistakes

The store closed because of disintermediation of the middleman.
Disintermediation made the store unnecessary because customers could buy directly from the factory.
The word already includes the concept of removing a middleman; do not say 'disintermediation of the middleman'.

Word family

Synonym discussion

Sense: noun/2

While 'disintermediation' is the formal economic term for removing an intermediary from a transaction, 'cutting out the middleman' is its everyday, informal equivalent — used in conversation and journalism but not in academic writing. 'Direct selling' and 'direct-to-consumer (DTC)' describe the resulting business model rather than the act of removal: a company sells directly to end users without retail stores or distributors. 'Bypassing intermediaries' is a verb phrase that names the action but is less concise than the noun 'disintermediation'. For example, a writer might say 'bypassing intermediaries helped the brand increase profit margins' — the same scenario as 'disintermediation helped the brand increase profit margins', but less formal and more action-focused.

cutting out the middlemandirect selling ↗direct-to-consumer (DTC)bypassing intermediaries

Common collocations

Nouns

  • financial disintermediation
  • disintermediation phenomenon
  • disintermediation process

Phrases

  • wave of disintermediation
  • period of disintermediation
  • threat of disintermediation
  • trend toward disintermediation

Etymology

LatinEnglish

A modern financial term built from the prefix 'dis-' (meaning 'away, reversal'), the Latin root 'intermedius' (meaning 'situated between' — from 'inter' = between and 'medius' = middle), and the noun suffix '-ation'. The literal sense is 'the process of undoing something that lies between'. The term was coined by economists in the 1960s to describe a phenomenon observed in U.S. banking: depositors withdrawing money from low-interest savings accounts and investing directly in stock and bond markets, thereby bypassing banks as financial intermediaries.

First known use

1967

1967, in the meaning defined at sense 1