Why cash recycling can pay off for banks

Cash can be a tricky payment method to manage. There's the matter of sorting the denominations, storing it safely and securely transporting it. On the ATM side, there's also the issue of replenishing cash for withdrawals.

All these tasks take time and employee attention, which for banks that are cutting back on branch expenses, can be a major drain on resources.

One solution is teller cash recyclers — machines that can automate many elements of cash management. In particular, it can count and sort cash from deposits into denominations and "recycle" it for customer usage. This can dramatically cut back or eliminate the need to replenish ATMs with cash manually.

However, cash recycling is still a relatively recent development for ATMs, which raises the question of whether it is actually a good investment that can save time and money while increasing teller productivity.

To get the answer to this question, and gain more insights into cash recycling machines, ATM Marketplace reached out to Roger Figart, executive sales consultant, business development director at Lansworth Enterprise Solutions/Vita Lansworth and William Budde, VP, banking strategy and solutions at Hyosung Innovue via email interviews.

Q. What are the top benefits of cash recycling?

Figart: Teller cash recycler (TCR) time savings are proven. Industry reports indicate tellers with cash recyclers spend 60-90 minutes more on the teller line daily interacting with customers, rather than focusing on manual tasks. On average that is a 12-18% increase in teller availability for customer transactions.

Cash recyclers improve overall operational efficiency in the branch — especially for the manual processes including start-of-day, end-of-day balancing, and vault buys and sells.

Implementing cash recyclers is a much more secure way to have cash in the branch. Cash recyclers offer an anti-theft deterrent. Robbers scope out a branch to know when they can force a teller to reach into a drawer and get a wad of cash. Tellers, employees, and customers feel safer knowing the financial institution is not a target.

Budde: Cash recycling automates many of the tasks associated with managing cash, providing many benefits. Specifically, a recycler's ability to count, sort and store cash for later use eliminates a lot of manual cash counting and handling, increasing an organization's operational efficiency. Additionally, recyclers are more accurate that manual counting, which creates fewer reconciliation issues. When cash recycling technology is used for ATMs, the ATM requires fewer replenishments, which creates a significant cost savings opportunity for financial institutions.

Q. How does it cut costs?

Figart: It is not so much that it cuts costs, but more about the savings in teller efficiency.

If two TCRs can support a staff of four tellers — using a figure of 12-18% time savings per teller, for a four teller branch that is the equivalent of another half to full-time teller.

FI's have been forced to increase wages to be competitive. If you do not have to train employees on the manual tasks of counting cash, your pool of applicants becomes much larger when you can focus on customer engagement. Implementing cash recycler technology becomes very cost-effective to justify cash recyclers in your branch network. While many clients focus on the capital cost, the ROI on a cash recycler is often one of the best in the business.

With today's labor shortages and the hidden costs of employee turnover, it takes six to nine months of an employee's salary to replace him/her. This equals thousands of dollars in training and recruitment. It is a quicker and easier onboarding process to train a teller in a branch with cash recyclers.

If your teller can handle more customers more efficiently, there will be a definite increase to customer/member impact. By reducing the manual tasks of counting cash, the teller can work in a faster manner and be more engaged with the customer.

Budde: The primary benefit of recycling ATMs is fewer cash servicing events, which directly lowers the operating expenses of an ATM. Additionally, fewer cash servicing events also means that there are fewer servicing errors that require resolution — things like miscounts leaving straps on notes. This error reduction also makes the overall operations environment more efficient.

Q. What are some of the challenges of deploying cash recycling solutions?

Figart: People/financial institutions tend to think implementing cash recyclers is complicated, or that they need direct software integrations. Software integrators like Add-on Technologies, Avivatech, Compuflex and CFM provide efficiencies and the ability to interface with the major teller software and core providers for bank and credit unions.

They are not sure that staff will like the cash recyclers. In most cases, staff really do like the technology. Tellers will need some training, but that is like all technology. In one scenario, a teller worked at a branch with cash recyclers but accepted a new position with a higher wage at a branch that did not have cash recyclers. The teller did not like the new position as there were so many more processes involved than at the branch that had TCRs.

Some financial institutions think that to implement cash recyclers it will require changes to the physical structure of the branch. While Vita Lansworth can't speak for all recyclers, there are minimal changes needed to implement CIMA cash recyclers. The CIMA product works really well in a traditional teller line, open branches, and especially in busy drive-ups.

Budde: One of the biggest challenges of deploying ATM recycling solutions is the technology infrastructure. Recycling is still early in its life cycle in the U.S. and not all providers have integrated recycling functionality into their solutions. Another challenge is the perception that since recycling is a relatively new technology in the U.S. which can be a negative for risk-averse organizations. The truth is that recycling technology has existed for a couple decades and is pretty mature. It's just new in its introduction to the U.S. market.

Q. How can we address these challenges?

Figart: Vita Lansworth, distributor for CIMA Cash Recyclers for the financial market, recommends directing the potential customer with the apprehension to talk with a financial institution that has cash recyclers installed. They can have a conversation to learn more about the many benefits including, training, ease of use, and adapting to the technology, as well as the ability to move staff from branch to branch when all the processes are the same.

Budde: Financial institutions and providers have an opportunity to work together to prioritize the implementation of recycling functionality. Recycling is still relatively new in the U.S. market, but as adoption increases and the value becomes apparent, it will quickly become the dominant method for the physical management of cash.