New Century Tasks

Article excerpt

Prepare with the Federal Reserve System to survive the year 2000

The move to the year 2000 touches all industries worldwide. Virtually anything in our daily lives that relies on computer software-from elevators and bar codes to cars and ATMs-will be affected by it. Your community bank's dependence on automation makes it extremely vulnerable to century-datechange risks.

Consequently, the readiness of the financial services industry, including regulatory agencies and service providers such as the Federal Reserve, is of crucial interest to all. (For more on the regulatory perspective on the year 2000 issue, see the feature on page 25.)

Like the Federal Reserve System, community banks have a lot of work to complete before the new century arrives.

Looming year 2000 glitches stem from date coding imbedded in much of today's computer software. Software programmers often used two digits, rather than four, to represent years. For instance, many computers use the number 99 to represent the year 1999. Consequently, when the year turns 2000, the software may calculate the date as 1900 because the century has not been defined. Such software may not be able to perform certain functions according to the logic built into the software.

Unfortunately, the year 2000 programming problem can't be fixed overnight. Most business consultants in the financial services industry estimate that once the recoding process is complete, testing will take almost as much time. The testing process is critical to verify that modifications fix any problems for the year 2000 and beyond.

Experts indicate that the time to start addressing the challenge has passed already, and the costs and staff hours to fix the problem will be substantial. Since initiating its Century Date Change project in 1996, the Federal Reserve developed a comprehensive program to complete all of its computer program changes by the end of 1998. The project's planning stage is finished, and Federal Reserve staff are analyzing, recoding and testing many of the agency's software systems. …