Is financial intermediation getting stronger as an institution? Qualitative case of distributed vs centralized simultaneous dichotomy

Egor Abramov

Chapter 11 in Research Handbook on FinTech, 2026, pp 200-214 from Edward Elgar Publishing

Abstract: This chapter aims to answer several questions: in these modern day and age dynamics, is financial intermediation growing stronger as an institution? Or is it not? Is it endangered? The article, thus, provides a qualitative analysis of the environment for the development of financial intermediation. The article's purpose is to dissect the divergent antagonism in the transformation of the institution of financial intermediation impacted by the change of the technological order. Technological advance, counter to cursory judgment, is found to impact the state of financial intermediation – the indispensable part forming the fabric of financial relations – in a non-uniform way. In one respect, the feasible impact of the technological aspects tied with digital transformation, including (but not limited to) fintech innovations, is proven to reinforce the contemporary system of financial institutions. Within this framework, I additionally address the dynamics of the efficiency of financial intermediation for the economy and the befitting avenues in the development of regulation of financial intermediaries. In another respect, the second tendency tied with the development of distributed (non-centralized) systems and, specifically, with the phenomenon of decentralized finance (DeFi) is analyzed for its destabilizing impact on the contemporary system of financial institutions amid financial democratization. The findings are further aligned in their simultaneity and for broad financial inclusion and network effects.

Keywords: Financial intermediation; Disintermediation; Decentralized finance; DeFi; Distributed; Non-centralized; Network; Financial inclusion; Network effects (search for similar items in EconPapers)
Date: 2026
ISBN: 9781035321414
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