Technology Solves the Dilemma of Managing Growing Cash Piles

For the retail sector Fiserv has developed a ‘smart safe’ to
help retailers handle cash more efficiently. It enables merchants to put cash
into a note collector, which checks the cash for counterfeits and stores it in
the safe. Once cash is deposited the retailer cannot take it out, so the
software can also enable the corporate’s bank to make a provisional deposit to
their account.

Along with getting money into their account faster
and reducing the number of trips needed to take cash to the bank, corporates
also benefit from less theft and greater safety. Armoured cars pick up the cash
from the safe as needed, and the bank reconciles the amount once they receive
it, then confirms the provisional deposit. To help corporates forecast their
cash needs better, Fiserv has also developed a forecasting algorithm that they
can synch with the bank so they order the right number of small bills and
coins. 

While petrol stations, quick service restaurants and
convenience stores have been early adopters, Layton said major retail stores in
the US are starting to take up the solution and there is rising interest from
corporates in the UK, the Netherlands, Australia, Singapore and other parts of
Asia as well. 

One challenge for Fiserv has been to manufacture or
deliver these large smart safes in locations closer to the customer. Another is
making sure that banks optimise the relationship with corporate clients by
providing provisional credits, which benefit both parties.    

To
respond to a growing demand for cash management solutions – and to increase
their competitiveness against firms such PayPal and transport companies that
are trying to move into the cash management space – banks are looking at how to
bundle cash management and transport services so they can make cash more
interesting and deepen their relationship with corporates. Along with offering
the safes, for example, banks are offering remote deposit capture. Bank
profitability also increases because they can often charge a provisional credit
fee of 10-18 basis points (bps) and  orporate can afford the fee due to their
lower costs for shrinkage and transport.       

Managing
Branch Cash Better 

As well as working with retailers,
Fiserv is also liasing with retail banks on better managing the cash in their
own branches. 

To sharpen banks’ forecasts of cash needs, Fiserv is
using past performance data from automated teller machines (ATMs) and teller
lines to forecast how much cash each branch needs. Layton said that about 70%
to 80% of cash comes out of branches through ATMs, so partnering to make the
machines more efficient and to conduct predictive maintenance to reduce outages
can help banks optimise cash and retain customers – for example through
techniques such as loading the ATM as close to the busiest period as possible.
Layton cited the example of one Australian bank, which saved more than A$2m in
float costs by studying its cash needs and changing the days that it resupplied
its branches.  

For ATMs that can accept cash deposits the rollout
has been challenging, because the depository size is limited and they fill up
quickly when money is not being taken out by consumers as fast as it is
deposited by merchants. The hardware has to catch up to capacity needs.   

As banks look further at replacing staff with devices, Layton said they
are evaluating depositary ATMs, smart safes and other hardware as well as the
technology behind the teller. In terms of forecasting requirements and
minimising idle cash, the devices provide information on cash levels by
denomination, and software can help banks forecast their requirements more
accurately. 

Since it is costly to accept and process cash from
retailers, banks are reviewing ways to automate the process with cash capture,
whereby the retailer feeds their notes into a device, or having corporates drop
bags of cash into the device so the bank can process them later in a central
location. On the cash delivery side, banks can also take data about cash
demands from corporates and create a cash transportation optimisation model
that tells them the day, time and frequency to take cash to the customer. 

“Cash is here to stay,” Layton said, so the key for banks is to look
at the different areas that can impact them and develop the capabilities to
serve their customers more effectively, as well as to meet their own needs
better. 

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