Over the last few decades, financial markets have evolved significantly following the precepts of disintermediation. During this time, we have witnessed a massive switch from traditional credit institutions to a system of direct access to capital markets. As organizations, banks have diversified their service offering to become commissioners – perceiving fees rather than interest payments.

This trend has had several positive consequences on the efficiency of financial markets as a whole : 1) they have suppressed an intermediary and replaced it with a pay-as-you-go system ; 2) they have reduced the monopolistic posture of certain banks and their ability to dictate market terms for credit ; 3) they have improved the allocative efficiency of capital, relying on open markets rather than single-individual (the banker’s) decisions and finally, 4) they have dissociated the fate of large public enterprises from their creditors’ (in)ability to follow suit, especially in cases of systematic risk, as demonstrated by the recent financial crisis. 

Moreover, in recent years, online pure-players have developed, advocated and often obtained the simplification of equity emission procedures in order to facilitate financial movements from one individual to another. In doing so, these new intermediaries are literally cutting banks out of the equation. Kickstarter, Indiegogo, and a plethora of smaller local or industry-specific crowdfunding websites are the new middlemen, acting as intermediaries but only from a social-linkage perspective. 

And banks are not the only ones to have been affected by this game-changing phenomenon. 

Beyond capital markets…

Beyond capital markets, the disintermediation of business relationships has also affected several other industries significantly. In the advertising industry, Forbes reports that marketing budgets were increasingly being invested directly into owned media such as page content, Web analytics, SEO and site design, as well as social media platforms, a shift that could be as large as $65 billion dollars in the U.S. only. 

What this means is that the traditional role of advertisers as specialty agencies between products and media outlets is being questioned, forcing several actors to scale up their game, from media planning to the largely more strategic and complex areas of business and corporate decision-making. 

In media, both entertainment and information entities are faced with a changed field in which intermediaries survive mostly due to certain forms of market control and oligopolistic arrangements. The threat of « piracy » that puts viewers or readers directly in touch with content produced by third parties undermines the ability of broadcasters and distributors to restrict choice and impose their artificial constraints – even though these have traditionally added little or no value to the customer (a question we have addressed in length heres). In television, the contemporary notion of « subscribing » to a set of randomly packaged channels sold by a bureaucratic intermediary is not only derisive, it has become economically inefficient and, as a result, practically irrelevant to the audiences.

Less is more

Contrary to the advertising and media industries, the fashion world is seeing a multiplication of its intermediaries on the Web. With e-fashion becoming the fastest growth driver for the industry as a whole (as reported here by Opera Capital Partners), countless new actors are developing disruptive business models and taking the Internet by storm.

From the "curated by" concept web site intervening upstream of the multi-brand e-commerce platform (in the likes of Shape of the Season) to the social networks globalizing the street stylist phenomenon, these emerging pure players add layers of complexity to the marketing mix, while competing for the attention of the same people. As customers inevitably filter the given options, one can question what value these e-commerce businesses bring to the table. As a result, established brands have to be more vigilant regarding their perceived positioning as it’s being drawn by the myriad of channels. 

Thus, disintermediation and re-intermediation are two complementary and simultaneously occurring trends that are taking traditional industries from the bottom-up, forcing them to come up with innovative, collaborative and open strategies to face the innovator’s dilemma. They promise both efficiencies through a more direct route from creator to end-consumer, but also require novel forms of curation in order to select among the mass of objects. The nature of intermediaries is changing, with the ability of navigating between several online platforms and communities becoming the primary asset for many.

For all the positive impacts of disintermediation, though, the risk is one of utter complexification, adding to the already unmanageable environments several new voices that compete for attention and dollars. We must beware that these new players provide more value than the simple arbitrage that's made possible by this complexity. The only way to do that is to embrace complexity ourselves, and surf the wave while it passes.