Last year Sanwa Bank's customers began complaining that their new credit cards, freshly issued with an expiration date of June 2000, wouldn't work when they went to the grocery store or the dry cleaner. This was Sanwa's first clue to the implications of what is commonly known as the year 2000 problem-the information and systems crises predicted when the internal clocks of the world's computers change the year to 00 at the stroke of midnight, January 1, 2000. "We were being rejected even though all of our systems told us (the cards) would work just fine," says Wayne Socha, vp and senior project manager of the Year 2000 project at Sanwa. "That's when the interconnectedness of this really came home to everybody; that we can do everything we can inside of here, but it's not going to solve (the problem) unless we really go out as far as we can with all the connections and partnerships that go on in banking today." Year 2000 preparedness is critical for all financial services companies. A recent Gartner Group study indicates that the average medium- sized company will spend between $3.6 and $4.2 million to correct the problem. But for California-based Sanwa Bank, a wholly- owned subsidiary of Sanwa Bank Limited of Japan with $8 billion in assets, the problem is magnified by the fact that 90 percent of its programming is vendor provided and only 10 percent created by bank programmers, Socha says. There are several ways companies can deal with the "Y2K" problem, from expanding fields to accommodate a four- character date to a fixed window technique that specifies a cutoff year below which dates will be considered to be in the next century. Because Sanwa deals with more than 350 vendors, the bank doesn't have the luxury of a standard solution. "Many banks pick a particular strategy and then do that for all their own systems," Socha says. "Here we can't choose a strategy, we're driven by the vendor(s)." Sanwa began studying the year 2000 problem in 1995 and expects to spend about $20 million and hire 55 new employees to gear up for the next millennium. The bank established a four-phase project led by the head of the Risk Management division. The first phase of the project took an inventory of computers and applications to make sure Sanwa knew where potential problems lurked. The second phase, completed in June, was an impact assessment, going into the hardware to determine exactly the magnitude of the problems. The third phase, which runs parallel to the second and fourth phases, is the correction of the problems-some reprogramming, some replacement. The most significant correction project is on the bank's deposit, consumer loan and customer information system. That project began June 1 and is scheduled for completion October, 1998. The other major correction project involves the desktop computers in the bank's 100-plus branches and the local area networks that support them. The fourth phase of the project is slugged "emergency repair" and anticipates that some vendors might not deliver their solutions on time or that the solutions might not be adequate. This phase is dedicated to devising solutions quickly. And though the project is neatly divided into four phases, Socha says 60 percent of it is really testing the technology solutions. In keeping with the FDIC mandates, the bank plans to have critical applications completed by December 1998 and all other operational equipment, from air conditioning to alarms and vaults, by December 1999. Sanwa is planning a bank-wide integrated test in 1999, possible by segmenting a part of its mainframe computer and setting it to a date sometime after 2000. And despite the nearly five years of planning dedicated to solving the millennium challenge, Sanwa Bank executives will not be tipping champagne glasses at 12:01 a.m. on January 1, 2000. "I plan on being right here at this desk," Socha says. "There's no parties planned for us; we're going to be here making sure that it works the way we planned it." -sausner tfn.com

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