Covid-19 has changed the banking landscape to a large degree. Despite the volatility in demand for cash since the advent of the pandemic, however, cash isn’t going away. And, although the cost of handling cash has increased, banks still need to provide cash to their customers where and when they want it.
With people avoiding groups of others, and unwilling or unable to go to the branches for service, the ATM has gained even more in importance. ATM use remains the most common method of self-service bank communication. Now, more than ever, banks need to employ efficient ATM cash management solutions to combat the rising costs of cash.
The question is, how best to accomplish this. According to Datamonitor, almost 50 percent of the network operating costs of non-recycling ATMs are the result of cash management. But what are the best cash management solutions, in-house options, outsourcing, or some combination of both?
Advantages of In-House Cash Management
According to the 2017 ATM Total Cost of Ownership Guide, a global poll of financial institutions done by ATM Marketplace, 45 percent of FIs used in-house cash management solutions. Some in-house cash management solutions banks are using are as simple, or as complex, as using Excel spreadsheets to keep up with the bank’s cash cycle. Other banks use “off-the-shelf” software that requires customization, annual support and enhancement services, as well as employees to confirm or change the software’s recommendations.
The most obvious advantage of in-house cash management solutions is that the bank is in control of all of its cash management processes. The bank may be able to maintain its security and confidentiality of information more easily when it keeps its cash management solutions in-house. And, arguably, your bank is in the best position to account for the way your ATMs run, including any things like community events that are associated with those particular ATMs.
Disadvantages of In-House Cash Management
Probably the most important disadvantage of in-house cash management solutions is that they divert the bank’s resources from other priorities, such as generating revenue for the bank and servicing its customers. This can lead to customer dissatisfaction, something a bank can ill afford. And, in-house cash management costs the bank money, not just in implementing its cash management solutions, but also in lost opportunities, such as developing new products and initiatives.
Advantages of Outsourcing All or Part of Cash Management
Outsourcing cash management solutions saves both money and time. With your cash management outsourced, your employees can concentrate on the bank's customers, sales and future bank initiatives, so you save time. The bank saves money because the partner they outsource to will be able to spread their costs out over their entire network of ATMs. And, most importantly, outsourcing your cash management could result in increased customer satisfaction.
The right cash management services can provide accurate, state-of-the-art cash forecasting for each of your ATMs so they won’t run out of money, or hold too much cash. This will result in increased productivity since there will be no out-of-cash situations. And, when a cardholder knows they can rely on your bank’s ATMs to provide the cash they want and need, it just enhances their experience with your bank. Further, with no excess cash in the ATM, you will save even more money by reducing the idle cash in your cash distribution system.
Disadvantages of Outsourcing All or Part of Cash Management
One of the primary disadvantages to outsourcing cash management services is that the bank loses control of the process. This is the natural converse of the advantage of keeping it in-house. Another serious disadvantage occurs if your outsourcing partner fails to keep all of your ATMs adequately stocked with cash and customers don’t get served. Since customer satisfaction is paramount, banks cannot afford for this to happen. And, the outsourced ATMs could lose some functionality, such as the ability to take deposits, which could cause a serious problem for the bank.
The Perativ Solution
Perativ provides banks the best of both worlds. You can have all of the time and cost savings of outsourcing, without losing all of the control. With Perativ’s cash management technology (SaaS/AI machine learning platform) you don’t just get software, like you would with “off-the-shelf” cash management solutions. We manage it and run it too. But also, with our breakthrough, automated, cash distribution optimization system you are provided a suite of interactive reports to show you what is happening with your cash, and most importantly, where it is at all times.
For instance, Perativ’s dynamic, pre-emptive cash forecasting updates every 10 minutes to let you know how much cash is in each of your devices. It automatically generates an ECL if needed. If you decide you want more cash sent to a particular machine, you can do so through the Perativ dashboard. But, because we have one unified body handling and optimizing the entire cash cycle, it is unlikely that you would need to do so. You’ll need no employee to confirm or alter this system’s recommendations like you would with an “off-the shelf” option.
This is because the Perativ cash optimization system breaks down the silos that exist in the heart of your bank’s cash distribution network. These four core functions: cash load compliance, treasury reconciliation, cash forecasting and bulk cash ordering are all interrelated within your bank, yet they are not fully integrated. This creates data lags between them that keep you from having full transparency into your cash cycle.
This is one reason why a “hybrid” cash management solution that splits functions between in-house and outsourcing can be counterproductive. For example, keeping cash forecasting in-house, but outsourcing everything else only creates the ultimate data lag. A cash forecast is only as good as the data informing it. Perativ’s cash management services get the four core functions operating in synergy within a system that is constantly updating itself.
Unlike one of the disadvantages of outsourcing outlined above, there are no cash-out issues with Perativ. The granular, pre-emptive cash forecast, tailored to the device level, sees to that.
Are you ready for the ultimate in cash optimization with Perativ’s cash management services?
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