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disintermediation
(redirected from Cutting out the middleman)

   Also found in: Encyclopedia, Wikipedia, Hutchinson 0.01 sec.
Disintermediation
Withdrawal of funds from a financial_institution in order to invest them directly.

disintermediation
The withdrawal of funds from financial intermediaries such as banks, thrifts, and life insurance companies in order to invest directly with ultimate users. Disintermediation was more of a problem when financial intermediaries were limited in the returns they could pay to savers. Deregulation of financial intermediaries was intended to dampen the periodic swings toward disintermediation. Compare intermediation.

disintermediation

The situation that exists when depositors withdraw their savings from financial institutions and invest the money directly in the marketplace,usually because they can obtain a higher yield even though also running a higher risk of losing their money.



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Esurance, which targets a younger market, has said by cutting out the middleman, it's able to offer a more competitive rate and be a low-cost operator.
Cutting out the middleman by going direct is not such a smart thing to do.
 
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