There is no doubt that cash demand has been quite volatile since the onset of the Covid-19 pandemic. However, even with the rising use of other payment methods, cash is still in demand. But, the cost of handling cash remains stubbornly high. Banks must find an affordable way to meet their customers’ demands for cash or risk damaging their relationships and their brand.
ATMs remain indispensable in this quest. They are currently the most commonly used self-service method of communication with banks. And, efficient cash management with respect to these ATMs can save banks money, increase profits and improve customer experience.
The goal of cash forecasting is to predict the optimal amount of cash needed to mitigate idle cash, but also make sure there is enough cash to meet demand. Banks may store as much as 40 percent excess cash in their ATMs to avoid out-of-cash situations. In this case, the bank loses money in transportation costs, cash upload costs, lost interest and the cost of other lost opportunities.
Effective ATM cash forecasting prevents idle cash from languishing in ATMs, while also providing enough cash to meet the demand at those ATMs. So, how is this done? Generally, banks either buy a tool to help them do their cash forecasting, or they build their own internal system. Both of these types of systems rely on historical data from the ATMs to predict what their demand will be in the future.
Machine learning can help. Artificial Neural Networks, or ANN is the primary tool of machine learning. It is a subset of AI that makes outcome prediction for software applications more accurate without express programming. Many ATM cash forecasting solutions rely on machine learning to generate cash forecasting. AI, on the other hand, accomplishes human intelligence tasks more rapidly and precisely.
But, cash forecasting is only as good as the timeliness of the data that is informing it. AI and machine learning are excellent cash management tools, but they must have accurate and up-to-date data in order to provide the most beneficial cash forecasting. Perativ’s breakthrough ATM cash management services employ AI with machine learning in a SaaS platform that will provide daily cash forecasting that is tailored at the device level.
But to get to this, the entire cash distribution network must be optimized. This is because cash forecasting is just one part of the puzzle, albeit an important one. There are actually four core functions at the heart of your bank’s cash distribution network that manage the total cash cycle. These are cash load compliance, treasury reconciliation, cash forecasting and bulk cash ordering.
These essential, core functions should operate in a continuous, harmonious loop of shared data. But instead, they exist in silos that, while interrelated, are not integrated. This creates critical data lags between the functions, rendering the most accurate cash forecasting impossible. Perativ’s dynamic, automated cash management system breaks these silos down and eliminates the data lags that are restricting the cash forecasting function.
These data lags begin with the load compliance core function. With load compliance, you want to know whether the right amount of money was deposited in the ATM on the correct day because having the money in the ATM, say, two days longer or two days less really matters. This is because that data will affect your next forecast. So you must have this information in a timely manner before your cash forecasting can be accomplished.
In fact, what happens with Perativ’s holistic approach to cash management is that load compliance is accomplished every day. In fact, we provide real time tracking of the amount and timing of each load. This data then informs the treasury function which is now able to reconcile daily and does so automatically with 98 percent of treasury items system reconciled. Any exceptions are immediately routed for prompt resolution. Typically this would have been reconciled weekly or monthly with a “suspense” account after load balancing and compliance were completed for the period.
Now, with both load compliance and treasury supplying timely data, Perativ’s cash management solution provides dynamic AI cash forecasting tailored to each device to maximize uptime and optimize cash versus cash loading costs. And, this forecasting updates every 10 minutes. The system also provides you with granular pre-emptive reporting based on ongoing activity. These forecast allows you to “see” if the machine is going to run out of money before the next scheduled load and determine whether an ECL is warranted.
The final function that takes part in managing the total cash cycle is bulk cash ordering. When your cash forecasting is accurate, you can control and optimize the idle cash in the system that may be needed for scheduled and auxiliary loads by ordering the optimal amount of cash per vault. This ensures both that your cash forecast is fulfilled and that the idle cash is mitigated.
Having broken down the silos that once prevented these four core functions from integrating, and thus reducing the critical data lags between them, the entire system now works in synergy. And this system is continually balancing within itself. That is the only way to know for sure where all of the money is at any given time. So now, cash forecasting is driven by a real time circular data feed that is constantly balancing.
With Perativ, you don’t have to stuff your ATMs with 40 percent more cash than they need to avoid cash-out situations. You have a dynamic, pre-emptive, AI forecast that will accurately predict demand for your ATMs. Your idle cash will diminish dramatically. That’s cash your bank can use for future bank initiatives and to generate profits in the near term. And thanks to the granular reporting you receive with Perativ’s cash forecasting, you save transportation and cash upload costs as well.
And don’t forget the priceless nature of continually good customer experience. Your business and brand will both profit from Perativ’s breakthrough ATM cash forecasting solutions.
Are you ready to maximize your cash efficiency with Perativ’s ATM cash forecasting services?
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