As banks hurtle toward the immovable deadline for fixing the so-called year 2000 problem, at least one bank technologist sees a silver lining in the potentially disastrous thunderhead of a technology issue.
Denis O'Leary, top technology executive at Chase Manhattan Corp., conceded that averting computer meltdowns would require arduous and expensive programming and testing for all banks but said such work is "an opportunity" that "opens a back office for a simpler design."
Mr. O'Leary delivered his opinion to an Office of Thrift Supervision Northeast region symposium hosted Friday by Chase in New York. About 220 who attended from banks, thrifts, and service companies were encouraged to move from awareness to action in facing the challenge.
The symposium addressed issues related to the millennium bug, which springs from a computer programming glitch that, left unfixed, could cause many business systems to misread the dates after Dec. 31, 1999.
Such misreading would be disastrous for banks, whose systems use dates for everything from interest rate calculations to running elevators and alarm systems in their offices. The Gartner Group of Stamford, Conn., puts the cost to all U.S. businesses at $350 billion. Chase has said it will spend $250 million to fix and test its systems.
Tri Ma Gia, manager of data processing examinations at the OTS, said even those financial institutions that are well into assessing and fixing the problem have much work ahead.
He said a minimum of 40% of time and expense should be devoted to systems testing.
The OTS is taking an active role in helping financial institutions by sending out information packets and monitoring banks and thrifts to make sure they are addressing the issue. The OTS' year-2000 checklist has 59 steps to help monitor progress at all stages from awareness to post- implementation.
Banks that already have begun to carry out projects said they can be more time-consuming than expected.
"It takes the average shop nine months to mobilize from starting the process to getting approvals to receiving funding to saying 'go,'" said Willie Kennedy Jr., senior project manager for 2000 at Key Services Inc., the technology unit of KeyCorp. Key Services, which has been working since late 1995 on the problem, selected Ernst & Young and Keane Inc. as its conversion partners.
"We have to test all our applications in order to determine which ones need to be upgraded," Mr. Kennedy said. "We expect that about 20% of our portfolio needs to be modified."
All the symposium's participants stressed the need for urgency.
"Think of the consequences of not fixing the problem," said Sally Katzen, information and regulatory affairs administrator in the Office of Management and Budget.
But later she optimistically added, "I hope this is the greatest nonevent that occurs."
Other speakers included Chris Carrington, vice president of CIO Services 2000 Group at Electronic Data Systems Corp., and Stanley Mattos, senior vice president of strategic consulting services at Alltel Information Services Inc.