What is... | August 16, 2011

What is fat finger?

Technology may have radically changed the way people run their finances but the human physique hasn't kept pace with the change. This is demonstrated by the strange-sounding “fat finger” – or when a typo leads to financial trouble.

High profile of cases of fat finger – where too many numbers were entered into a computer – is a reminder to everyone to take care.

Digital errors
On 06 May 2010, the Dow Jones Industrial Average index of New York shares dropped 1,000 points and sparked a $1 trillion decline in stock values around the world. One explanation for the “flash crash” was a data entry error by a trader typed in "b" for billion instead of "m" for million – the letters are close on a keyboard. In the end, an investigation by US financial regulators found no evidence for the fat finger theory. 

In a high-profile case in New Zealand, a banking employee reportedly extended a NZ$10 million loan to a customer by mistake instead of the NZ$100,000 approved – with the fat finger incident leading to troubles. The importance of fat finger syndrome is not just applicable to financial transactions.

In December 2005, it was claimed that London's victory in hosting the 2012 Olympics was partly down to a member of the International Olympic Committee pressing the wrong button during a crucial third-round vote.

Festina lente
Such stories are useful cautionary tales for households given that so many transactions from online banking to ecommerce are done using computers. But small scale investors and professionals alike can transfer large sums of money at the press of a button. Entering the wrong number – such as an extra zero when transferring money – can cause short-term problems as the money leaves the account, even if the funds are restored in the long run. It is also possible to transfer money to an incorrect account if the wrong account number is entered. It can be very difficult to retrieve the money in these circumstances. 

Bank customers would be well advised to remember the Latin instruction from Roman Emperor August – festina lente – that roughly means act quickly, but don’t rush. On the positive side, the advent of online banking means that if it is the bank teller who has a fat finger and inputs a cheque incorrectly, the customer will spot the mistake much quicker than if they waited for a monthly statement.

Beware fat finger “dialing” 
As well as adding in extra digits, consumers should be aware of other risks involved in filling in financial forms online. Online transactions such as settling a bill to a utility company or a credit card provider often require ticking a number of boxes, failure to do so results in the money not be transferred. And in what’s known as fat finger “dialing”, calling the wrong telephone number can also cost. A report from North America says getting a digit wrong in a commonly called number could see callers put through to a different line that has a per minute rate or tries to sell text message services.

Drip, drip, drip
An associated danger that can push up the cost of online transactions – but not directly related to fat finger – is drip pricing. Drip pricing is when extra changes are added later in the transaction, with fees for shipping or paying by card among the common examples. This eZonomics article suggests ways to spot price drips. It again shows that double-checking online transactions is worthwhile – whether to catch a typo or to catch a surprise extra charge.


Phil Thornton
Phil Thornton

Lead consultant at Clariti Economics