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  • Eternal vigilance is the price of convenience

    Article by Jayant Pai in Afternoon DC, June 20, 2016

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    Today, the word 'technology' is more synonymous with convenience and comfort rather than fear or dread. Various user-friendly applications of technology have become so ubiquitous that it is difficult to imagine life without the various gizmos that surround us. It has spread its tentacles into the arena of investments and other aspects of personal finance too. This has a few advantages:

    Information for everyone: Today, merely having access to information (of the legal kind) is no longer considered an edge. Today we are swamped with data and information of all hues, which is available in everymediumpossible. Besides, regulatory improvements have led to a quantum leap in disclosures leading to better quality of data too. This has certainly levelled the playing field for investors.

    Easier transactions: When was the last time you waited in a line to withdraw cash at a bank or at your electricity company's office to pay your latest bill ? Today, whether it is utility bill payments, stock-trading, banking or payment of insurance premia, we first think of the online option.

    Disintermediation: Apart from better information flow, users are helped by the fact that many product manufacturers, such as mutual funds, can reach out directly to their end-users through the internet. While this has fostered a feeling of insecurity among intermediaries, well-informed consumers are jubilant.

    Plummeting costs: Technology has not only enabled product providers to reach out to more prospects, it has also enabled them to lower their cost of operations.

    New product categories: A decade ago, nobody would have ever dreamt that an insurance plan could be offered online. However, today, online term plans are the fastest growing product category for insurance companies.

    While most of us would agree that these advantages are great, there is a flip side to it too. Some disadvantages of being addicted to technology are:

    Loss of personal touch: Today, Interactive Voice Response (IVR) systems and virtual assistants / chatbots are par for the course. While the older generation laments the lack of personal touch, to millenials this is the only form they are familiar with.

    Security: Nowadays all companies reassure us that they have robust security systems for their transactional portals. However, there is another kind of threat which they can do little to avert: Today our life is governed by myriad passwords. There is always the danger of us unwittingly revealing the same to others.

    Data loss: Data may also be lost or compromised due to fraud which takes place at the service provider's end. Hence, it is prudent to maintain some physical record of the details of one's financial assets

    More...but maybe not better: The profusion of data has shortened the time horizons of many investors. Often, they are led by impulse rather than reason.

    Transaction errors: It is likely that users may commit errors in entering data while transferring funds or placing orders on online broking platforms. Sometimes these errors are difficult to reverse, leading to great anguish. On balance, while it is true that technology has made our life easier, at the end of the day, it is up to us to ensure that we are itsmasters and not its slaves.

    The original article could be seen here.

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