The origin, operation and regulation of electronic banking in Tanzania: law and practice

This is a study which examines the origin, operation and regulation of electronic banking in Tanzania, dealing mainly with law and practice. It examines the role of paper based payment instruments in modem commercial transactions and the challenges they face in electronic banking practices. It establishes whether the law relating to negotiable instruments in Tanzania is keeping pace with modem technological advancements. The study presents a discussion on the origin and progressive development of electronic banking in the country with a view to establishing whether the legal environment is adequate in providing for the rights and duties of parties to the transaction. It makes an analysis of the types of electronic delivery channels utilised by local commercial banks. It discusses some pertinent issues in the successful implementation of electronic banking and, finally, it presents the findings of an interview-based survey carried out to evaluate the Tanzania customers’ perception of electronic banking services. This study comes out with the findings that there are mainly five delivery channels, namely SWIFT, ATMs, EFTPOs, Telebanking as well as Internet banking utilised by commercial banks in Tanzania; the majority of bank customers prefer human tellers to ATMs; the law relating to negotiable instruments lags behind modem technological advancement; the law relating to electronic banking is inadequate; consumer protection under electronic banking is not guaranteed and that the regulatory regime in the sphere of electronic banking is not adequate. The study concludes that a proper legal regime is yet to evolve to provide to both banks and their customers the comfort and confidence in most EFT applications.