A bank can lose money because it takes risks on its balance sheet, but what about a Fintech startup that only acts as an intermediary ? I wrote in a previous article about the financial concept of Principal vs. Agent, and how disruptive finance has seen a lot of companies focus on being Agents, in other words push for Disintermediation. A simple example of a Principal transaction would be a bank lending to a consumer – and therefore taking the risk of default. An Agent example would be a p2p platform connecting an investor to the borrower – and therefore NOT taking the risk of default, but leaving it with the investor.

http://www.disruptivefinance.co.uk/?p=314