Predicting your cash – why banks need to get smarter with advanced cash flow technology

With cash withdrawals rising by about 3% every year in the UK (Payments UK), and the number of ATMs growing by an average of 12.4% annually since 2010, the global number of ATMS is expected to rocket to over 3.5 million by 2020 (Accenture). So, it’s safe to say that cash remains a valuable part of our financial system, especially for smaller businesses.

Even with the increasing rise and adoption of alternative digital payments (card-based payments, mobile payments) within UK, many independent businesses in smaller towns and villages rely on cash payments. During the busy summer season and bank holidays, when visitors rush to ice cream vans and rowing boat hires, the need for easy access to cash for tourists becomes evident. Other events which may cause an unexpected spike a bank’s cash flow include sporting or cultural events, or even just good weather that drives people to visit the seaside.

These visitors are likely to need cash, and they’ll head to the nearest cashpoint in town to try and get it. Our report looking at ATM Future Trends 2017 confirms that 63% of UK consumers consider it important to have an ATM nearby, with 43% using them on a weekly basis and a further 31% using them more than once every week. But what happens if this influx of demand means your bank’s local ATMs run dry and access to that cash for your customers suddenly disappears? While the impact on the local economy may be clear, banks often overlook what it could mean for their brand reputation.

Banks have several very important factors to weigh up when planning their cash management. The costs of insurance to keep cash in the branch and vault need to be minimised, as do the logistical costs of topping up cash machines if they run out as well as other considerations.

Some banks might choose to hold off replenishing supplies to make sure the next delivery arrives just before it is needed, increasing the cash availability risks, while others will rely on putting multiple ATMs in each location, or accepting the increased insurance costs. The strategy taken will depend on specific branch calendars, country regulations, number of cashpoints in your network and lots of other variables.

If your customers can’t get access to their money, they’ll turn to your competitors and will make sure to vent their frustrations on social media. Your brand reputation is on the line. While there are many elements to consider, simple steps can help you get the timing of your deliveries right, and keep your cash levels at their optimal level.

The rise of data and integrated systems within the banking industry has enabled predictive analytics to become an increasingly important part of a bank’s cash planning system, examples of which include our solution WWS Cash Management. Our management system is supported by a back-end module, Cash Predictive, which analyses at least a years’ worth of past cash needs looking for patterns and trends which the bank needs to consider. Other factors such as location then come into play to optimise cash delivery for each cashpoint. Much of this technology is self-learning, so it will continuously adapt to the banks’ needs. Given an ever more integrated banking ecosystem, a separate module, like our front-end Cash Console module, receives calculations from the bank and monitors the entire process of cash handling.

The benefit to customers is clear, as cash management makes it unlikely that they will have to face an empty ATM when they are trying to withdraw money. There are undoubtedly also many benefits for banks, too. Knowing how much cash is needed in an ATM helps banks to reduce their stocking and retrieval costs, as they only hold the amount that is actually needed. In turn, holding less cash leads to lower insurance costs and greater security.

Proper management of the cash replenishment process leads to greater efficiency – and could reduce the cost of cash management by up to 25%. We invite banks to see the benefits for themselves by testing out our systems in a trial period – they won’t be disappointed!