Controlling the rising costs of cash

With the cost of cash estimated to make up around 30-40% of total ATM operating costs, and rising faster than any other cost, finding a way to better manage the cash cycle across the ATM estate will deliver significant benefits.

Escalating cash management costs are a result of rising inflation impacting the supply chain, most noticeably transportation costs, as well as interest rates increasing the cost of the cash itself. Many FIs plan daily fulfilment of ATMs across their network, meaning Cash-in-Transit (CIT) is becoming more and more expensive. But is it what you really need—or is it just how it’s always been done?

To make that decision you need to understand and analyze your cash environment. A simple excel spreadsheet is a one-dimensional approach that doesn’t enable you to optimize the cash supply chain. For a holistic view of the entire process, a dedicated cash management and optimization system is required, delivering a highly effective way to minimize the impact of the cost increases.

Interest rates are rising across the globe. In the UK, they’ve gone from 0.5% in February 2022, to 3.5% in January 2023* with a similar picture across much of the developed world. When you look at emerging markets, interest rates are hitting high single, low double digits but there are some areas of the world, where like in Argentina interest rates are an astronomical 75%**.

*Bank of England **Tradingeconomics.com

Such technology helps you optimize the cash supply chain not only for your ATMs but also for your branch network and cash vaults so you can reduce the number of cash deliveries and remove redundant cash from the system.

By using mathematical models to analyze the cash environment, the system recommends strategies that minimize delivery costs, cash holdings and cash outages. That means a dedicated cash management and optimization system can deliver a significant and rapid return on investment.

An advanced cash management and optimization system will be highly flexible, allowing you to set business rules that suit your objectives. Whether it’s focusing on reducing CIT visits above reductions in cash holding, removing redundant cash or eliminating cash-outs; whatever your top priority, the system can be configured to match your priorities and easily adjusted as your requirements evolve.

The benefits of using a cash management system can’t be ignored. Some banks adopting this technology have reduced the amount of cash they are holding in their ATM networks by up to 30% or more without degrading customer service. Others have prioritized reductions in CIT costs and achieved similar savings in excess of 30%.

As cash supply becomes the greatest single cost in running the ATM channel, cash optimization technology is no longer a want to have, it’s a must-have.