Swiccom Finance

There are a number of ways to achieve financial disintermediation in an economy:

• Develop and promote alternative financial services (AFS). AFS are financial services that are provided outside of the traditional banking system. This can include microfinance institutions, peer-to-peer (P2P) lending platforms, mobile money services, and other innovative financial solutions. By providing access to these services, individuals and businesses can bypass traditional financial intermediaries and gain greater control over their finances.
• Promote financial literacy and education. Financial literacy is the ability to understand and effectively use financial products and services. By increasing financial literacy, individuals and businesses can make more informed decisions about their finances and are less likely to be reliant on financial intermediaries.
• Reduce barriers to entry for financial services providers. This can include streamlining regulatory requirements, reducing licensing fees, and providing access to affordable technology. By making it easier for new financial services providers to enter the market, competition can be increased and costs can be lowered.
• Encourage the use of technology in financial services. Technology can be used to automate many of the tasks that are traditionally performed by financial intermediaries. This can lead to lower costs and greater efficiency. For example, online banking and mobile banking allow individuals to access their accounts and conduct transactions without having to visit a physical branch.
• Support the development of capital markets. Capital markets are financial markets where long-term debt and equity securities are traded. By developing capital markets, businesses can access financing directly from investors, without having to go through a bank.

Financial disintermediation can have a number of benefits for the economy. It can lead to lower costs for borrowers, higher returns for investors, and increased access to financial services. However, it can also pose challenges for traditional financial institutions. As a result, it is important to carefully consider the potential impacts of financial disintermediation before implementing policies to promote it.

In addition to the above, here are some specific examples of how financial disintermediation is being achieved in different parts of the world:

• In China, Alibaba’s Yu’ebao money market fund has attracted over 600 million users by offering higher interest rates than traditional bank accounts.
• In Kenya, M-Pesa, a mobile money service, has allowed millions of people to access financial services without having to open a bank account.
• In the United States, Lending Club and Prosper are two of the leading P2P lending platforms that allow borrowers to obtain loans directly from investors.

These are just a few examples of how financial disintermediation is changing the way that financial services are delivered. As technology continues to develop, it is likely that we will see even more innovative ways for individuals and businesses to access financial services without having to go through traditional financial intermediaries.