Blog: The How, Where and Why of Cash Recycling in the U.S.

June 06, 2019  |  THOMAS SCHULZE

My colleagues and I recently hosted a webinar on a topic that always seems to be “coming soon” to the North American market: cash recycling at ATMs. Has its time finally come? Is the U.S. finally ready to embrace cash-recycling ATMs? Some interesting signs are pointing to yes, and the webinar, Busting Myths about Cash Recycling in the U.S., explored these emerging trends in detail. The full webinar featured insights from DN’s Global Advisor for Banking Channel Transformation, Jim Flannery, our Sr. Director of Brand Evangelism and former Dir. of Software, Scott Anderson, as well as my own thoughts on the topic and some excellent viewer-submitted questions. So where is recycling headed in the U.S.? Here’s my quick answer:

The culture of recycling

There are some similarities around the globe in terms of how people bank, but I think there are a few key differences that explain why some countries have implemented recycling more than others. For one, the interbank and switch relationships are very different. P2P and P2B payments in Germany, Europe and Asia have been very simple to conduct for many years—through the use of kiosks for bill pay and teller transactions for P2P payments. This behavior meant that check use has never been as prevalent in these countries as it has been in countries like the United States. Areas without heavy check use were thus one step ahead at the ATM—they could focus on cash and software-based transactions without worrying about check handling.

One behavior change that I think the U.S. can learn from is the way retailers modified their cash-drop processes once recycling technology arrived in Europe and Asia. The retailers readily made the switch from dropping their night deposit in a bank’s drop box, to depositing it at a recycling ATM. This behavior change enabled the cash-in required to drive daily dispensing: Merchants fill the ATM, consumers empty the ATM. I believe retailers in the U.S. are ready to make that change, especially as modern ATMs offer larger note capacity, the ability to accept large bundles, mixed bundles, etc., and direct crediting of cash to accounts.

The emerging shifts in U.S. banking culture

Over the past 12-18 months, I’ve met with dozens of FIs of all sizes, and there is a clear trend of increasing cash deposits at the ATM. We’re seeing deposit increase rates of 20% or more—and when you have these strong deposit levels, the environment is ripe for closed-loop recycling. At DN, our Advisory Services team has built increasingly sophisticated data analysis tools that drill down in very detailed ways to FIs’ fleet data. The team can analyze an entire fleet and determine the exact ATM locations where recycling would make sense, based on hard data about deposit and withdrawal rates, and identify how and where CIT visits could be reduced.

Another trend driving change is consumers’ desire for new functionality and additional withdrawal options beyond $20 bills. Additionally, with new innovations in the marketplace, recycling technology can be paired with advanced software to create systems that decrease reliance on the switch. So there are new opportunities for efficiency and cost savings.

In our recent guide to shifting your perspective on the self-service channel, Self-Service Reloaded, we give you a much more detailed deep-dive into these trends, along with how, where and why we believe recycling is the answer. You’ll find the thoughts I shared above, along with my perspective on what FIs in the U.S. can learn from more mature recycling markets. If you haven’t already read it, I encourage you to take a look—you’ll find everything you need to make the case for cash recycling within your own organization!

Interested in discussing how and where cash recycling makes the most sense for your financial institution? Let’s start a conversation.

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