STP is an initiative used by companies in the financial world to optimize the speed at which transactions are being processed. It is done by electronically connecting participant’s internal systems with Central Bank’s RTGS System and hence there won’t be a need to enter same pieces of information repeatedly.
STP will increase the efficiency level at participant’s end due to shortened processing cycles. It will also reduce operational errors and moreover curtailed operating expenses because of not reentering transactions in multiple systems. STP is beneficial in decreasing settlement risk. This is because of shortening transaction-related processing time will increase the probability that a payment contract /agreement will actually settled on time.
Since the inception of RTGS in many countries, enrollment of direct participants is growing and volume of transactions is also increasing. It has been foreseen that in future, volume of transaction will increase dramatically. This growing volume forcing banks to deploy a gateway application between Core Banking System and Central Bank to improving performance of financial messages communications channels.