A lesson in disintermediation

I recall learning the real meaning of the word “disintermediation” in the mid-90’s, when I was helping mutual fund companies build systems to do exactly that: cut out the middle-man (the broker or dealer) in some of the transactions that they have with their end-customers. The primary vehicle for this disintermediation is, of course, the web, where now almost all financial services companies provide some sort of self-service, bypassing a mutual funds dealer, securities trader, bank teller or insurance broker whenever regulations allow. This trend is not restricted to financial services: travel agents, for example, have been practically disintermediated out of existence in some market segments.

The “bad guy” in this has always been the big company: by allowing their customers direct access to their services, they endanger the livelihood of the intermediary. (Having been self-employed for most of 20 years, I don’t believe in the sanctity of any job, but that’s a topic for another day.)

Now it’s the banks’ turn to be disintermediated. The Economist reports in a recent article on the launch of Zopa, a UK-based online lending and borrowing exchange: consider it peer-to-peer lending for the rest of us.

Since borrowers and lenders can get together without a bank in the middle, Zopa effectively disintermediates the bank, while providing bank-like security through credit checks, spreading each loan over multiple parties, and committing to collecting from overdue borrowers. Borrowers are classified by their risk, and lenders choose the level of risk that they want to assume when picking a market within Zopa. Zopa takes 1% of the deal, which means that borrowers get a better rate than a bank could offer them for a consumer loan, and lenders get a better rate than a bank savings account. To quote their site:

Lenders can choose what rate to lend at and, by looking at the markets, decide what sort of people to lend to and when. Borrowers can choose to take a rate offered or to wait and see whether the rates drop. Both avoid paying needless chunks of commission to Financial MegaCorp plc and can get better rates of interest as a result.

I love that dig about “Financial MegaCorp plc”.

You can be sure that the big financial institutions will fight the growth of exchanges like Zopa when it starts to impact their business, but then, all parties being disintermediated fight the trend. This style of borrowing and lending won’t be for everyone, but it will attract those who don’t want to spend the extra money just to have a bank in the middle, any more than I would pay a higher fare to have a travel agent book an airline ticket for me.

BPTrends’ 2005 BPM Suites Report

BPTrends published a report on BPM Suites this week that reviews 13 different BPM products:

  • Appian Enterprise from Appian
  • AgilePoint from Ascentn
  • XicoBPM from B2Binternet
  • Chordiant Enterprise Platform from Chordiant Software
  • TRAXION Enterprise Business Process Management Suite from CommerceQuest
  • eg work manager from eg Solutions
  • FileNet Business Process Manager from FileNet
  • WebSphere Business Integration from IBM
  • WorkPoint from Insession Technologies
  • Business Conversion Suite from M1 Global Solutions
  • Pegasystems SmartBPM Suite from PegaSystems
  • TIBCO Staffware Process Suite from TIBCO Software
  • Ultimus BPM Suite from Ultimus

The major players are definitely covered here, but there’s a few of these that leave me wondering about the criteria for inclusion in this report. That cleared up a bit when I read the section Participating Vendors in the Foreward to the report:

BPTrends contacted all the BPM vendors we could identify and solicited their participation in this report at a cost to them of under $5,000. All products from participating vendors were evaluated in the same manner: Derek Miers and Paul Harmon prepared a detailed questionnaire which we asked each vendor to complete. They then reviewed the questionnaires, studied the product documentation and all other relevant materials provided by the vendors, and requested a product demonstration. Finally, they interviewed each vendor to eliminate any confusion and to make certain we had not overlooked anything. We did not conduct any actual product testing.

In other words, it appears that the vendors paid a fee to be included in the report, and the vendors provided the content for the report rather than it being based on independent observations. Although the authors have provided some nice summary pages that list each product’s characteristics on a separate page, there are no negative comments about any product, and there are few comparisons between products: this is more like a collation of each vendor’s product information rather than a product review as you might find from Gartner. Still, there is much useful information about the products in the report, and some excellent introductory material including the authors’ view of the BPM space and a summary of BPM drivers.

My assessment of BPTrends’ report: the first 38 pages (prior to the actual product information) contain some great background information. The product sections, although well organized and well written, don’t provide anything that you couldn’t get from the vendors’ websites.