The year 2000-on the calendar and in the form of the much-discussed computer bug-is seven months away, and banks are taking no technological chances.

These are the months when what so many people call Y2K will lose some of its abstraction and begin to have a more tangible, operational impact.

No one is talking about disasters or breakdowns, but there may be a fair amount of breath-holding.

Many institutions are preparing to impose moratoriums on installing new systems. That caution, allowing for almost total concentration on year-2000 matters, will cause pent-up demand, in turn leading to an explosion of system rollouts early in 2000.

"There will be a flurry of efforts in February, with projects kicking off in pilot or production mode," said James Reichbach, banking segment leader at Deloitte Consulting in New York.

"For three years, the pipeline has been filling up," said M. Arthur Gillis, president of Dallas-based Computer Based Solutions Inc.

He predicted a new type of countdown will ensue: Y2KU, or Years 2 "Katch" Up. Mr. Gillis sees that cycle lasting as long as six years, which will be music to the ears of the many system vendors that recently had to temper near-term sales expectations.

"There is a lot of indication that third-party application sales have been slowing down this past half-year," said Regan Wong, analyst at Tower Group in Needham, Mass. "A lot of vendors are getting ready for post-year- 2000."

But we get ahead of ourselves.

Though the vast majority of banks are not in panic mode and are said to be squarely hitting year-2000 conversion deadlines, they are furiously testing and striving to ensure the stability of their Y2K-compliant environments.

"We don't want to introduce any pollution" into systems that have been fully overhauled and tested, said Douglas J. Spence, president of Huntington Services Co., the technology subsidiary of $29 billion-asset Huntington Bancshares in Columbus, Ohio.

Even the credit card industry, which had to confront 2000 ahead of most others because of two- and three-year card expiration cycles, is not out of the woods. The earlier efforts merely allowed MasterCard International, for example, to turn attention this year to testing and to contingency planning for problems in phone networks or utilities or other "things outside of our control," said president Robert W. Selander.

There is still plenty to be done, and "not a lot of us will be out celebrating" this New Year's, Mr. Selander said. "Dec. 31-Jan. 3 will be a working weekend."

Sellers of advanced technology related to electronic commerce and other initiatives have had to be particularly patient.

"Y2K is slowing banks down," said Nagy Moustafa, president and chief executive officer of Diversinet Inc., a Toronto- and Silicon Valley-based vendor of public key infrastructure and digital certificate systems.

"I can sell them certificates, but they have to develop new electronic commerce applications," he said. "No one is touching their systems or buying software or even connecting new PCs to networks until the year-2000 problem is solved."

John McGuire, chief executive officer of Trintech, a prominent provider of secure payment software for the Internet, said, "There is basically no overhaul of infrastructure taking place in the physical world, no upgrades" until the hazards are fully addressed.

Companies such as Trintech can benefit, he said, when their systems configurations can bypass the legacy computers that cause most of the Y2K angst. And many banks reportedly have not let the bug derail Internet priorities.

Technology companies whose business models rely heavily on software licensing, as opposed to recurring fees associated with outsourcing, are feeling a pinch, said Charles Wittmann, an analyst at First Union Capital Markets. "Smaller banks, if they have any year-2000 concerns, are going to service bureaus" rather than buying new software, he said.

Michael Nicastro, vice president of Open Solutions Inc., a vendor of core banking software, said its installations are coming "to a screeching halt."

The client/server systems vendor, which is based in Glastonbury, Conn., said it has a handful of installations scheduled this year, largely new banks.

"We are doing a few conversions and installations at existing banks, and those had to basically go crawling on their hands and knees to their regulators to allow it to happen," Mr. Nicastro said.

Bankers say they do not expect to be hurt by any development moratorium.

"There is a difference between development efforts and actual implementations," said Thomas Ducca, chief information officer of Dime Savings Bank in New York. Though Dime probably will not put any new systems into production in the fourth quarter, it will continue to develop and test them, he said.

Frank Robb, chief information officer of Wachovia Bank, said, "The development staff doesn't go on vacation."

Winston-Salem, N.C.-based Wachovia has declared a moratorium on new technology releases from Oct. 1 to February at the earliest. With all its systems overhauled, tested, and back into production, the Wachovia Corp. subsidiary is intent on maintaining stability, Mr. Robb said.

"We don't want to introduce any additional risk," he said. "If there were even a blip related to a new installation, people might associate it with Y2K."

Projects Wachovia is postponing include an implementation of PeopleSoft enterprise resource planning software, which can be extremely complex, and the integration of Interstate Johnson Lane, a brokerage firm acquired last October.

Come March, "we will be anxious to get back into normal operation," Mr. Robb said.

Northern Trust Corp. of Chicago will freeze "mission-critical" application software installations starting Sept. 19, said Timothy Theriault, executive vice president and chief technology officer. That will let the banking company run its revamped code over the third quarter's closing. It will cease installing less-critical software in mid-November.

Installations will resume as the company sees fit. Mr. Theriault said the end of February may be a turning point because 2000 is a leap year and some experts say Feb. 29 might also pose a calendar problem.

"Sure, Y2K has caused us to allocate resources that we would have preferred to use in other ways, and to postpone development work that we would have liked to do sooner," said Mr. Selander of MasterCard.

Like the larger financial institutions in its membership, Purchase, N.Y.-based MasterCard had to categorize large-scale systems and prioritize needs. It identified 35 systems as core operations, retired two of them, and had all 33 others year-2000-ready by yearend 1998, Mr. Selander said.

Mr. Spence of Huntington said last year his company spent $9.5 million to hire people to crunch code for 2000. From a peak of 42 people devoted to the task last year, he is down to 16, expects to have five by September, and none at yearend.

That $9.5 million brought no return beyond enabling Huntington to stay in business, Mr. Spence said. This year, the company plans to spend $5.5 million to $6 million on hired help with expertise in areas seen as yielding clearer returns on investment, such as data base administration, networking, and electronic commerce.

Like other banking companies, Huntington can count at least one benefit from its year-2000 investment-more mainframe power. Last year, it bought a mainframe system exclusively to test Y2K code. With the project winding down, the computer is being moved to a new facility that will offer three times the computing power and better backup than before.

"We merchandised" the year-2000 project as an opportunity for an upgrading, Mr. Spence said.

Chase Manhattan Bank retired, collapsed, or converted 40% of its applications and consolidated 50% of its infrastructure, said Steven Sheinheit, executive vice president of corporate systems and architecture.

The result is "a strong, up-to-date portfolio and an upgraded infrastructure, along with Y2K" compliance, Mr. Sheinheit said. "We would have done it anyway, although maybe a little later."

He contended that the year-2000 problem has not caused Chase to stray far from major strategic technology investments and goals.

Mr. Wong of Tower Group said strategic initiatives such as electronic commerce and customer relationship management did not appear to have slowed much. "But I wouldn't be surprised if banks haven't been able to pursue them as aggressively as they would like," he said.

In a report released in February, Tower Group predicted that after Jan. 1 banks would increase their investments in technologies to improve customer sales and service, expand financial planning services, and enhance data warehouses.

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