With an eye on improving profits and productivity
By Tim Grabacki
Despite a reductions of the branch footprint and digitalization of some products and services, costs associated with branch networks still hover around $1 million to $2 million to operate annually (depending on size and location).1 Cash processing, in particular, remains a costly part branch operations with high manual labor, especially related to processing. As McKinsey notes, in regions with rising labor costs and in the context of rapid digitalization of bank operations, the share of cash costs has become “increasingly relevant.”2
When examining how to cut these costs, financial institutions (FIs) must make process changes that result in immediate branch efficiencies. While it may seem counterintuitive, an ideal place to start is to bring previously outsourced processes back in-house. When making the decision to insource specific tasks, FIs must consider if the task is strategically important and/or has a significant impact on operational performance.3 One such area that is ripe for insourcing is the processing of commercial deposits and ATMs.
Keeping cash in-house, while trimming costs
Processing ATMs and commercial deposits is a critical task that contributes to the overall performance of the branch. It is also one that, with the right equipment in place, can be retained in-house.
By bringing currency processing back in-house, FIs can avoid paying high transportation and processing fees, negate the need to issue cash orders to make up for cash being tied up off-site and deposits can be quickly processed and paid out as change orders or used to replenish ATMs. This not only allows FIs to avoid the lag time associated with currency pickup, transport and processing but also eliminates the need to borrow additional funds for other operations.
The benefits of processing ATMs and large commercial deposits in-house are clear, but the only way to reap these benefits is to implement the right currency processing technology; deploying the wrong solution can erode profits in the branch due to labor inefficiencies. That solution is multi-pocket currency sorters.
Countertop multi-pocket currency sorters are designed to count and sort large volumes of cash for quick, efficient ATM and commercial deposit processing. These multi-pocket machines are considerably faster5 than recyclers, a feature critically important to FIs that wish to save on labor in the branches. Financial institutions that have installed multi-pocket sorters have been able to achieve significant return on in investment in months, not years, in the form of eliminated armored transport service costs, minimized processing time and reduced labor required in the branch.
Why deploying the right equipment is crucial
Utilizing in-house multi-pocket currency processing equipment can dramatically decrease the time it takes for branch personnel to complete routine tasks, such as ATM processing. Today’s most advanced technology has been shown to reduce the processing time of each ATM from 45 to 5 minutes. An institution with five or six ATMs at a single branch location, for example, might typically rely on armored transport service for daily trips (or multiple trips per day).
By switching to in-house processing, FIs can eliminate high transportation and processing fees, improve inventory management and get a return on investment in a short amount of time. In fact, an FI could reduce the number of cash orders by approximately 50-67 percent.
Consider the substantial time and labor savings that could be achieved if this strategy were implemented across multiple ATMs and branches — including reallocating employees to higher-value, customer-focused tasks or eliminating the need for additional full-time employees across multiple branch locations.
Benchmark financial institutions extend process improvements throughout the branch
Bringing ATM and commercial deposit processing back in-house has proven results. One large benchmark FI reduced processing time for each ATM by 89 percent; one person now processes all the ATMs at a branch in less time than it took to process just one ATM previously. The FI achieved an ROI on the multi-pocket sorters in a few short months.
The FI also found that the benefits of using this fast and easy solution extend beyond simply handling ATMs and commercial deposits. Multi-pocket sorters also let branch personnel:
- Repurpose cash in the branch by restocking teller cash recyclers and teller drawers efficiently with the right mix of denominations
- Face bills for better customer service with one-pass processing
- Make straps for other functions in the branch
- Significantly reduce CIT charges
Whom you partner with matters
Key to achieving optimal ROI with an insourced currency processing strategy is a vendor partner to help tailor the equipment investment and configuration to best suit the needs of a given branch. A vendor with the proper expertise and the most advanced technology can work with branch personnel to determine the proper number, footprint and configuration of machines to ensure optimal efficiency. When fully and properly implemented, this insourced approach can have a measurable positive impact on an institution’s day-to-day operations and be a boon to any branch’s bottom line.
Tim Grabacki is with Cummins Allison.
1 “B of A Gives Itself Five Years to Save Branch Banking.” https://www.americanbanker.com/news/b-of-a-gives-itself-five-years-to-save-branch-banking
2 “Attaching the Cost of Cash.” https://www.mckinsey.com/industries/financial-services/our-insights/attacking-the-cost-of-cash
3 JetScan iFX®i400 processing speed. https://www.cumminsallison.com/us/en/products/currency-handling/jetscan-ifx-i400