Some 200 staff at Bank of Ireland's information technology division were due to stop working for 24-hours from mid-night, beginning the first bank strike in 12 years.
The bank and the Irish Bank Officials Association have both pledged that the dispute will cause minimal disruption for customers although there are signs that the one-day strike could escalate.
The staff involved work at ITSIS, the bank's information technology support division, at Cabinteely, Co Dublin providing support for the bank's key services such as ATM machines and internet banking.
On the eve of the dispute, IBOA general secretary, Mr Larry Broderick, said its members were very responsible people who would show consideration for Bank of Ireland customers and their colleagues. He warned though that the trade union could seek to escalate industrial action across the wider Bank of Ireland group unless the current difficulties are resolved.
"There will be minimum impact on customers. This is being done to get a message to the bank that we need to develop a more mature relationship going forward," he said.
A Bank of Ireland spokesman, continued to state that the union's demands were unreasonable and that it had put contingency plans in place to limit the impact on customers. "It will not be evident to the general public, but there will be disruption internally," he said.
The 200 staff will return to work tomorrow morning but a ban on overtime will continue indefinitely.
The increasingly bitter dispute is in response to the bank's plans to outsource its information technology services activities to Hewlett-Packard under a €600 million seven-year contract. The IBOA members who would transfer to the US multinational have been guaranteed job security for two years but are seeking an effective passport to return to the bank if redundancies were sought after that period.
The bank, which has pointed out that 125 of the 528 people affected, have less than two years service with the bank and yet are looking for a guarantee of job security for seven years.
Mr Broderick expressed concerns about the intransigence of the bank on the issue of job security and has questioned whether this marks the beginning of a move towards further outsourcing of Bank of Ireland's non-core activities.
"We are not against outsourcing but we have to take this issue on and to protect jobs," he said yesterday.
This is the bank's third attempt to outsource its information technology activities. It previously entered into an agreement with Perot systems which was ended. The bank also tried to forge a joint venture with AIB, but this too foundered.
