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SPRINGING AHEAD EARLY: AVOIDING DAYLIGHT SAVINGS TIME PITFALLS FOR FINANCIAL INSTITUTIONS


NEEDHAM, MA, February 27, 2007 - The Energy Policy Act of 2005 mandates that Daylight Savings Time (DST) will begin this year on the second Sunday in March, several weeks earlier than historically observed. TowerGroup's overall assessment for financial institutions is that DST will prove more a nuisance than the cause of any significant business outage. However, there are clear steps institutions can take to minimize risks and potential business disruptions involved with the coming change.

Since this is a date-dependent issue, it represents a "forced" type of upgrade which IT departments can't choose to defer. While this can create more challenges than the typical software upgrade, TowerGroup does not perceive DST to be a major obstacle. On the IT spending front, the resources being allocated to the time change will likely be covered by the maintenance budget umbrella at most institutions - unlike more significant programming issues like Y2K. For some institutions, timing will present a larger challenge than spending allocations - in terms of having to purchase / install upgrades earlier than planned.

While DST is unlikely to be a significant disruption, there are several operational implications that should be planned for at both the customer and business levels to maintain high levels of service during the adjustment to this new time period. While these steps remain close to core operational procedures, they may affect the timing of IT expenditures in both money and human resource terms:

  • Institutions should preview automated transactions that may be affected by timing, adjust as needed, and conduct a close follow up review after the fact. Information on any mis-recorded transactions must be quickly relayed to all appropriate parties.
  • Because fraudsters are always looking for a weakness in financial transaction systems, due diligence and care in reviewing system reports - while always important - warrant special care during and after the time change.
  • Call center activity should be monitored for any social engineering attempts regarding transaction adjustments.
  • Of special interest are older legacy systems where hard-coded programs may be tied to fixed times. These systems should be subject to regression testing and monitored for unusual results.
  • Financial institutions should proactively contact key business partners and customers, to coordinate and verify that all parties have factored time changes as they occur.
  • Institutions must ensure that vendor-created patches to commercial programs correcting the time change are properly installed and tested. Regression testing again is critical here. It may be a requirement for the institution to first upgrade to a current version before patches will work. Additionally, after the application of a patch, some manual adjustments to calendars are likely depending on the sophistication of the vendor's solution.
  • Institutions should implement a proactive communication program targeting all employees - given that it is not only the responsibility of the business to prepare for such changes, but also that of each individual within the organization.
  • Finally, institutions should also monitor the event weekend for any system level or security related abnormalities.

Rodney Nelsestuen, a senior analyst in Financial Services Strategies & IT Investments practice at TowerGroup, is available to comment on the financial services industry readiness relative to DST.

Members of the press may contact Lisette Kwong at +1.212.642.7753 or Lisette.kwong@edelman.com to arrange an interview with Mr. Nelsestuen.

About TowerGroup: TowerGroup is the leading research and advisory services firm focused exclusively on the financial services industry. A respected source for trusted information and advice, TowerGroup brings many of the world's leading financial institutions, technology companies, and professional services firms a deeper understanding of the business and technology issues impacting their organizations. Headquartered near Boston in Needham, Massachusetts, and with offices in North America and Europe, TowerGroup serves a global client base. Visit www.towergroup.com for more information.

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