Squeezing cost out of your ATM ops with cash management solutions

Accurate cash forecasting is hard. But ineffective cash management is hard on the bottom line — no more so than when it comes to ATM operations.

Firstly, there's the cost of having a CIT provider shuttling cash around from place to place in unplanned or unnecessary trips.

Secondly, there's the opportunity cost when excess cash sits idle in a vault instead of serving a more useful purpose somewhere else.

Thirdly, there's the the loss of both ATM transaction income and consumer trust when a would-be ATM user stops by a nearby machine for cash and finds it out of service because someone underestimated demand.

For insight into how a financial institution can simplify cash management with a flexible solution and what benefits they might expect, ATM Marketplace put a few questions to Cleopatra Mavredis, global marketing manager for cash solutions at NCR Italy. Here are her emailed responses:

Q: What can a cash management system do for an organization?

A: The key benefit is the reduction of operational costs and creation of process efficiencies, which in turn offer additional cost savings.

Q: What if there's an unexpected event — a natural disaster, for instance. Can a cash management solution adjust for this type of situation?

A: Absolutely! One of the most powerful features of the solution is its flexibility and the ability to adjust to events impacting cash demand.

Q: With interest rates so low, is it that big a problem if a financial institution is letting extra cash sit in vaults or cassettes?

A: This is truly dependent upon the geography and how the territory's cash distribution infrastructure is set up. There are many countries that have low interest rates but still look to a solution to help better manage their cash in order to reduce other costs, such as high CiT transport costs.

Q: Approximately how much can an organization save on cash handling using a cash management program?

A: Of course, much depends on the organization's willingness and ability to change internal processes, however, we have seen some customers save up to $1,000 per ATM per year, $2,000 per branch per year and much more for those customers who are still managing their own vaults.

Q: Is there some way that an institution can gauge upfront what savings or other benefits it might see from cash management?

A: Yes! And that is one of the particular strengths of our solution. The simulator — or modelling feature — within the solution allows us to use real customer data in order to quantify potential savings.

Q: What is the ROI for such a program?

A: Whilst it is very difficult to give a specific number without knowing an FI's ATM and branch estate size, we have customers who have reported a return on investment just four months after going into production with an ATM-only solution.

Q: How big does an organization need to be to see a return?

A: There is no limitation to the size of a bank that can begin to enjoy cost savings — and hence, an ROI — on the investment in a cash management solution. Not only that, there is the added assurance that the investment made in the bank's device estate is also being utilized at its fullest by happy customers.

Q: What if an institution uses cash recycling ATMs in its fleet, or is thinking of adding them. How does cash management figure into that scenario?

A: Due to the complexity of the cash recycling ATMs, FIs are now being asked to forecast based on "unknown" demand at a denomination level. Quite often, branch staff are not equipped with such knowledge and may under-forecast, leading to cash outages.

The right cash management solution should be in a position to: a) simulate cash demand for any new technology; b) maintain high ATM availability by avoiding costly cash shortages; and c) look at an integrated approach to savings. This goes not only for the ATM, but also for the branch and vaults, as well as analysis of the overall cash distribution process.

Q: What is the best implementation of a solution? Software as a service or resident on the FI's system?

A: Actually it really depends on many factors, especially those that are closely aligned to the bank's strategy. It is no longer the case that a tier-one bank would chose an on-premises solution while a smaller institution would opt for a managed service solution.

The true benefit is working with a partner who can provide not only the necessary consultancy to make such a decision, but also the crucial ability to offer flexible deployment models.

Q: Could an FI benefit from a solution if they are currently paying a monthly forecasting service fee?

A: Monthly fees are based on an estimate of activities in order to cover costs. However, if an FI is underutilizing the services that make up the monthly fee, then effectively they may be paying more and not know it.

Under such circumstances, we would invite those FIs to participate in a data simulation activity to verify whether or not further savings can be gained.

Q: What features should an organization look for in a cash management program?

A: For a start, flexibility. Understand the difference between being able to "configure" a solution and being able to "program" a solution. You wouldn't want to spend additional funds to customize to your needs. Look for a solution with plenty of built-in parameters that provide customers the needed flexibility to easily manage the ATM estate.

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