disintermediation
Disintermediation is when people or businesses skip the traditional bank in the middle and move money or do deals directly, often through apps or platforms.
In plain English
Aunty Bisi used to send ₦20,000 to her sister in Ibadan through the bank, filling a slip, standing in a queue, watching the cashier stamp things twice for no reason anyone could explain.
These days she just opens an app on her phone, taps her sister's number, and the money lands in seconds. No queue, no slip, no cashier, no stamp. That gap she just closed, the space where the bank used to stand and take its time, is what bankers call disintermediation.
It simply means cutting out the middleman. For decades, banks sat between everyone and their money. You wanted a loan, you went to a bank. You wanted to save, you gave your money to a bank to hold and hopefully grow. You wanted to pay someone, the bank moved it for you and took a fee for the trouble.
Now fintech apps, mobile wallets, and peer to peer lending platforms let people do a lot of that directly. A trader in Onitsha borrowing working capital from a lending app instead of a bank branch is disintermediation. A UK based Nigerian sending £200 home through a transfer app instead of a bank wire, paying less and arriving faster, is disintermediation too.
It is not that banks disappear overnight. It is that they lose their grip on being the only route between you and your money. Some banks have responded by building their own apps and cutting their own queues, because if they do not remove themselves from the middle, someone else happily will.
Instead of paying a bank ₦3,500 to transfer ₦100,000 to a supplier in Kano, a small business owner uses a payment app that charges ₦50 and settles in under a minute, no branch visit required.
Questions people ask
Is disintermediation bad for banks?
It can shrink certain income streams, like transfer fees, but many banks now build their own digital tools so they keep customers instead of losing them to fintech apps.
Does disintermediation mean banks are becoming useless?
No. Banks still hold licences, manage risk, and provide services like large loans and foreign currency accounts that most apps cannot fully replace yet.
Is sending money through an app instead of a bank actually safer?
It depends on the app. Always check that it is properly licensed and regulated before trusting it with your money, the same way you would check a bank.
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