BANKING
August 03, 2017 | THOMAS CERTA
Eighty-five percent of global consumer transactions are conducted with cash. Whether at an upscale shopping center or in a supermarket, the cash people use when shopping generally comes from an ATM. According to a recent RBR report, some 99 billion cash withdrawals were made worldwide in 2015, with the number of withdrawals increasing year-over-year in all regions[1]. The report also notes that the worldwide ATM installed base is projected to grow by 21% (at a CAGR of 4%) between 2016 and 2021, to over 4 million.
But as cash circulation rates increase, the cash cycle becomes more complex for the financial institutions (FIs) that need to manage all that cash. Cash handling is expensive, and the costs of handling it rise with the volume of cash in circulation. Personnel expenses make up a majority of these costs, but insurance, the opportunity costs of cash holdings and the logistics of transport and cash processing also play a role.
Together, they can amount to a severe strain on the profitability of bank operations. On average, cash management for ATMs accounts for 48% of ATM network operating costs globally – an estimated € 1.3 - 2.6 billion per year in Europe alone[2]. So it comes as no surprise that the optimization of cash processes has enormous potential to reduce costs and improve profitability.
A critical tool available to FIs is recycling technology. For many years now, Diebold Nixdorf has been optimizing cash handling for retail banks and credit unions with innovative cash recycling systems for both self-service and the front office. We have been a pioneer in this technology from the start: Our first recycling systems went into operation in 1997. Today we are the world-leading supplier of secure, reliable cash recyclers.
Cash recycling is on the rise around the globe, as FIs recognize the potential savings these terminals can deliver. Installations in Europe rose by 30% between 2014 and 2015, and by 2021, 67% of all new automated deposit-enabled terminals will be recyclers[3]. Recycling systems make cash handling more efficient by processing deposited cash automatically and making it available again for withdrawals, creating a closed cash cycle within the system. Our state-of-the-art systems test deposited banknotes for fitness and authenticity, and store validated cash where it can be used for cash dispensing. The result is a short, efficient cash cycle with integrated cash management that makes high transaction volumes more manageable.
The Role Small Businesses Can Play in Recycling Programs
Local retailers can help drive a successful cash-recycling program, with both FIs and the retailer benefiting from the technology. Small businesses can take advantage of immediate account-crediting when they make a bulk deposit, and the FI benefits from an influx of cash that can be immediately transferred to the terminal’s dispenser. This cycle minimizes the need for replenishing or cash removal.
Our past implementations have shown that intervals for cash-in-transit (CIT) services can be lengthened by a factor of three or four, saving manual work as well as the expense of frequent or even unplanned CIT call-outs. In other words, cash recycling dramatically reduces costs thanks to automated processes and optimized cash replenishment and removal. Likewise, FIs are less likely to run out of cash in areas where withdrawals area high, and they’re less likely to overstock their ATMs. And, by its very nature, cash recycling offers increased security since the cash is being handled much less frequently, and notes are authenticated automatically, which reduces the likelihood of fraudulent notes. Additionally, the notes are stored in a secure safe, improving branch security.
Automated recycling does more than minimize management and security costs. Lost interest, interbank loan payments and cash insurance costs can all be decreased when an ATM is replenished through deposits made at the device, since less cash must be borrowed to keep the ATM filled.
Helping FIs better understand where and how to optimize this process is the focus of our strategic True Cash Cycle Management program. Our tailored, collaborative approach focuses on end-to-end optimization of cash processes, by considering cash management from multiple perspectives: technological, commercial, security, branch process, operational efficiency, usability and serviceability.
Most of all, we carefully consider the impact on people, because we understand the potential of technology to dramatically enhance the personal experience. For bank employees, this means spending less time on repetitive cash-handling tasks and concentrating more on core tasks such as personalized customer interactions, high-end consultancy and improved cross-selling. Consumers benefit from better, more responsive service, which drives increased positive experiences, confidence, trust and loyalty.
Download our whitepaper: The Case for Cash Recycling
Find out more about how cash recycling could work for your network. Let’s talk.
[1] “Global ATM Market and Forecasts to 2021,” RBR, 2016
[2] Annual ATM Services Expenditures,” Datamonitor, 2015. “Best Practices in ATM Cash Replenishment in Europe,” European Payments Council, ATM Industry Association, 2014
[3] “Deposit Automation and Recycling 2016,” RBR, 2016