Includes references(60-67 p.)

'ABSTRACT This study aimed to identify the challenges and impacts of the use of transaction processing systems in banking indystry. Transaction processing systems are currently used for financial transaction in bank. It helps in reducing operational cost, integrating banking networks for better sharing of information, enabling electronic commerce, guaranteering accuracy in transactions, and ultimately support decision making about future events. Despite its benefits, there are challenges such as, loading issues, index problems, internet breakdown, storage corruption, transaction errors, DB management issues, and unorganized changes to updated software, which currently have to be handled. Risk factors impacting on financial transaction such as; power failure, internet attacks, staff risk competitor risk, e-banking fraud and credit card transactions were identified and measured. After collecting data via interviews and analyzing it, solutions are proffered to meet up with present day challenges and future demands on TPSs. In order to increase efficiency of transaction processing systems there will have to be inclusion of a data warehouse in transaction software, data management utilities made easier to handle, system security made tighter, and internet platforms enhanced. Our survey was done in Cyprus with five sampled banks. Key words: Transaction processing systems, usefulness of TPSs, risk factors affecting e-banking, informaton systems, types of transaction processing systems. '