The fate of the big data banks

I remember “disintermediation.” In finance that used to be a thing. The vision and the trend line was predicated on the dismantling of banking institutions that stood between depositor/investor/consumer and borrower/issuer/vendor into various component parts to give each more direct access to the other.

And the result was many funds – hedge, venture, growth equity, assorted debt, and so on – and funds-of-funds, and other forms of go-between through which sources and uses passed. And banks of course were still involved in all of that, plus countless new advisory (gatekeeping) operations to help sort through the tangled mess. And later on the ETFs and index funds that would in theory disintermediate the mutual fund segment. (And who even knows what dark pools really are, apparently these also are disintermediating something.) And as the funds-flow architecture evolved to also disintermediate the system, there is by now a so-called payments category made up of layers like a jigsaw puzzle, where finance and technology converge.

So anyway, that’s how “disintermediation” seems to have unfolded, while the disintermediated banks are now many times larger than they were when this whole thing began. And every layer in the illustrated market network takes a cut for services provided. And every layer grows the shrinking distance between depositor/investor/consumer and borrower/issuer/vendor, the space where there is interference of some kind, for payment that is rendered.

With that by way of history, we enter now a time of break-up and anti-trust motif, directed at new data banks that have emerged. These, too, it seems, are ripe now for their fated disentanglement.