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  • [Asian Banks Face Y2K] Korea Looks to U.S. Vendors to Solve Year 2000 Computer Problem
  • October 19, 1998 (SEOUL) -- As the jitters expand over the problems associated with the Year 2000 (Y2K) computer problem, business managers, financial planners and government policy-makers in Korea are seeking the assistance of software professionals.
    This is good news for software vendors and system integrators, and particularly those from the United States, which control much of the global market for Y2K solutions.

    Korea's financial industry is now running against time to beat the millennium bug before the dawn of the year 2000. Korean banks, securities firms, insurance houses and other financial institutions now realize that their business survival is at stake.

    According to the Bank of Korea, the country's financial industry was making progress in Y2K configurations at an average 82.1 percent ratio as of the end of June 1998. The central bank wants financial institutions to complete implementation and testing procedures by the end of this year. And industry-wide testing is planned for the first half of next year.

    Banks are most active in tackling the Y2K problem with 88.8 percent of the banking system deemed Y2K compliant at the end of June, compared with 81.3 percent in the securities industry and 68.6 percent in the insurance industry.

    "The Y2K project is well under way at most banks in Korea, and banks are expected to meet deadlines without much difficulty," the central bank said in its Y2K status report issued in August.

    Financial institutions are required to report their Y2K readiness to the central bank every quarter until the project is complete. Also, contingency plans must be developed under various Y2K failure scenarios, including a massive system crash at the critical change of calendar year. Those failing to meet deadlines will be shut out of the country's payment and settlement systems, according to the central bank.

    Many institutions that have been tinkering with their systems on their own will need to hire outside vendors to test software and hardware integrity, while a few laggards will have to purchase entire packages.

    "The market has limitless potential, but we have seen only bits and pieces so far," said Choi Bong-gi, a Y2K project manager at Computer Associates Korea. "From now on, more institutions will come to the market because they know time is running out."

    Many foreign and domestic vendors are vying for market share in Korea, including big names in software and hardware industries, such as Microsoft Corp., Oracle Systems Corp., Novell Inc., IBM Corp., Unisys Corp., Hewlett-Packard Co., Sun Microsystems Inc., Compaq Computer Corp., Silicon Graphics Inc., Lucent Technologies Inc., Northern Telecom Inc. and Fujitsu Ltd.

    Smaller foreign companies also have a presence in Korea, while some Korean electronics makers and system integrators such as Samsung Electronics Co., Ltd., Samsung SDS Co., LG-EDS Systems Inc. and Hyundai Information Technology Co. are competing with the bigger foreign rivals.

    The odds appear to be in favor of the U.S. companies.

    "U.S. companies have an advantage because they possess a huge domestic market, which allowed them to accumulate a great deal of know-how on the Y2K problem early on," said Yang Jae-seung, an information service manager at Unisys Korea. "Many of the local tools available now are not adequate to handle mainframes because of various loose ends."

    IBM and Unisys are ahead of the pack with their mainframes installed at nearly all financial institutions in Korea. "We are looking at the Y2K business as a natural extension of our existing customer service," said Lee Byung-yun, an IBM Korea spokesman.

    Some of the largest life insurers are already procuring IBM's Y2K services. And Unisys is working on Y2K system upgrades for its mainframe clients, including Cho Hung Bank and Shinhan Bank, two of Korea's largest commercial banks.

    (James Lim, Asia BizTech Correspondent)

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    Updated: Fri Oct 16 23:50:24 1998 PDT