Some questions have never been asked of the banking system before, but Year 2000, the socalled millennium 'bug', and the ability of computers to recognise two zeroes as the new chronological date, represent an entirely new, if once-off, set of circumstances. The Government has voiced its concern at the complacency shown by many SMEs over the Y2K issue, but what of the larger organisations we depend on for daily commerce - in particular, can we count on the banks in the first hours and days of the new millennium? The answer to this question is a very definite "Yes", but getting to the stage of providing such reassurances has been anything but routine for the banks, as the AIB Group's preparation programme clearly illustrates.

Because it literally runs on information and the computers that process it, banking has had to prepare more thoroughly and comprehensively for this event than probably any other industry worldwide.

The banking public needs to be reassured that Year 2000 poses no threats, and the AIB Group's preparations show how potential threats have been overcome and eliminated.

The risks associated with the Year 2000 phenomenon can be likened to a series of concentric circles, the innermost of which is represented by the internal information technology (IT) on which the entire group runs.

This comprises all the computers, embedded chips, communications networks, software programmes, security equipment, and building management systems, that are directly owned or controlled by the group itself and which are amenable to a straightforward fix.

By the end of this year, AIB will have spent some £32 million on a Year 2000 campaign that first began in 1995. This has consumed 350 man-years of effort, as 46 information technology teams tested every single computer and software application in the group for potential non-compliance. In addition, an independent specialist company was drafted in to test some 3,000 embedded chips, to determine their Year 2000 compliance.

In the case of embedded chips, no problems were identified. In the case of computers, software programmes, and so on, any issues regarding noncompliance were resolved either by upgrading or replacement.

All systems that process customer records were checked to ensure they could complete the transition through the Year 2000 without any problems.

Incidentally, thousands of bank customers throughout Ireland are already "into" the next millennium through the cheque, ATM, or credit cards they carry with an expiry date of "00" or later.

The IT "fix" is now virtually complete and the group is confident that the risk of internal disruption has been absolutely minimised. But no organisation is an island, and all banks depend to some degree or other on outside suppliers of goods and services.

The supplier base constitutes the second risk "circle" of our concentric model, and in AIB's case there are 1,500 suppliers and trading associates, such as other banks and international payments clearing systems, whose Year 2000 compliance is important to the working of the entire banking system.

It is here that the technology issue acquires a broader business focus. A key element in overcoming this part of the risk profile is the identification of the most important suppliers, from public utilities to software writers.

The group's own specialists are working closely with these firms and will stay with them throughout the millennium period in order to identify potential pitfalls, cure any systems shortcomings, and ensure that no issues of compliance arise.

This approach greatly reduces the risk of suppliers failing to deliver the goods, literally, because their computer systems fail to operate on January 1st. But even that does not go far enough, and each of the businesses that comprise the AIB Group structure has its own contingency plans against anything that can happen in the transition period.

AIB is not the only organisation undertaking this rigorous approach. All interdependent organisations are making similar checks on each other, so much so that a system of Year 2000 verification has emerged that greatly reduces any potential risk.

This approach, incidentally, stretches well beyond our shores and encompasses organisations like SWIFT, the international payments processing network shared by hundreds of banks, and CREST, the London Stock Exchange's trading network.

This should offer considerable comfort for bank customers.

Returning to our concentric circle model, there is the outer ring, which is essentially about human reaction to the Year 2000 issue. The issue here is the perception, rather than the reality, of risk. There have not yet been signs of panic or unease among consumers, for which we can thank the responsible coverage of the Year 2000 issue by the media.

But the public must be offered as much reassurance as possible, and the best means of achieving this is by demonstrating the exceptional rigour with which the banking industry's various systems have been tested in order to ensure they will work properly on January 1st and beyond.

By artificially bringing the date forward to December 31st, 1999, and through to early March 2000, it has been possible to test all AIB computer systems for real-life Year 2000 conditions, with particular emphasis on those considered "mission critical".

These are the computer and information systems that mark the points at which the public and the banking system directly interact, and includes such vital features as account records, data bases, Laser card transactions, ATM machines, credit card purchases, 24 hour banking, electronic banking, finance and lease functions, and so on.

Nobody can offer cast iron guarantees that there will be absolutely no failures on January 1st, whether in public services or private companies. What AIB and the banking industry in general is offering, however, is an assurance that the system will continue to function normally despite whatever glitches may arise.

Where will you be in the early hours of the next millennium? Probably joining with the rest of the revellers in the biggest New Year's celebration the world has ever seen. If so, are you confident that the cash you need will be dispensed by an ATM at a minute past midnight, or that your restaurant will accept your Laser or credit card in payment as it has always done?

Pat O'Reilly is AIB Executive Year 2000 Project director