PROGRESS, OPPORTUNITY AND CHALLENGES OF EHIOPIAN AUTOMATED TRANSFER SYSTEM (EATS) INTERFACING WITH BANKS

Abstract

This thesis intends to explore the progress, opportunity and challenges of interfacing Ethiopia Automated Transfer System with Banks. The study was conducted to address what are the challenges of participant banks interfacing with Ethiopia Automated Transfer System (EATS)? and what are the opportunities to participant banks implementing Ethiopia Automated Transfer System (EATS)? based on the data gathered from seven banks including NBE in Ethiopia. The researcher used an exploratory research design and mixed research approach to answer these research questions. The study statistically analyzes data obtained from the survey questionnaire and qualitatively presents the interview results. The result of the study indicated that the major challenges that the participant faces interfacing of EATS are inadequate infrastructure, business continuity plan, security risk, requirement gap in core banking solutions implementation , inadequate IT strategy and leadership resistance to change, lack of comprehensive and standardize risk management document, limitation on geographical coverage of clearing process, lack of updated procedural manual, absence of service line agreement between participants and NBE. The study also identified the benefits, the major once are inter-bank transactions of high value and low value payments, ease of use, reduction of error and fraud, increase number of transactions, encourage competitiveness, eases to incorporate other payment instruments in the future. The study concluded that to enhance efficiency, reduce costs; avoid risk and speed up the payment, clearing and settlement systems, communication between the system provider (NBE) and the participants in the system should be based on electronic data interchange in standardized format. Therefore it needs close follow up and monitoring and regular dialogue session among the stakeholders in order to exploit the most out of it.