When ATM cash recycling makes sense
In recent years, ATM cash recycling has continued to demonstrate its efficiency and convenience when strategically deployed across ATM fleets.
Today, as cash-handling costs continue to edge upward and cash demand — in both mature and emerging markets — shows no sign of an imminent decline, the technology is finding broader application than ever.
ATM Marketplace recently asked Neill Harris, marketing director of portfolio marketing for financial services at NCR Corp., for his thoughts on the potential benefits of ATM cash recycling and the upfront assessments an operator needs to make in order to reap the maximum impact and ROI from a cash recycler placement.
Here are his insights …
Q: Let’s start with the basics — how exactly does cash recycling work?
A: Cash recycling allows financial institutions to deposit and dispense from the same cassette in a recycling ATM.
The cassette in a recycling device is more advanced — the mechanism is adjusted so it can dispense and deposit cash to and from a single cassette, allowing financial institutions to make the cash-in-transit cycle longer. For a financial institution, it means efficiency, cost saving and security.
Q: What attributes make an ATM a good candidate for cash recycling? What might disqualify a location?
A: As long as there is a need for dispense and deposit functionality, that ATM is a good candidate to become (i.e., be upgraded) or be replaced by a cash recycler.
It’s unlikely that a financial institution would introduce cash recycling in a high cash dispense-only location. Therefore, it’s important to carry out an on-site assessment through detailed transaction data collection and analysis.
NCR is the only vendor in the market that offers customers a full cash recycling consultancy-led engagement and a thorough data analysis of the ATM network. Customers can then make an informed business based decision as to whether cash recycling makes sense for a given location.
Q: Are these considerations the same for financial institutions and independent deployers?
A: Yes, faced with the twin challenges of aging technology and a more demanding consumer, deciding where to start when creating an effective cash management operation can be overwhelming.
By following three simple steps, FIs and IADs can minimize the risks associated with any program of change, to develop a more profitable ATM channel. These steps are: preparation; pilot; and ongoing life cycle management. All of these steps should be underpinned by an ongoing data and performance analysis.
Q: Aside from reduced cash carrying costs, what are the benefits of implementing cash recycling ATMs?
A: There are many benefits that cash recycling can give to financial institutions and IADs. As cash remains the primary means of payment in many countries, this in turn drives demand for fast, secure and convenient access to cash.
For example, in China and South East Asia we see a greater demand for bigger bunch size and increased security. Cash recycling allows FIs and IADs the ability to offer their customers larger deposit and dispense amounts. It is all about a premium customer experience and increasing customer satisfaction through the self-service channel.
Financial institutions also continue to demand higher availability, improved performance, increased security and service efficiencies, in short, lowering the cost to serve their customers. A cash recycler fit for the 21st century must be able to handle poorer note quality and variance, a mix of polymer and paper notes and new security features.
Operational efficiencies coming from cash recycling are also extremely important and play a strategic role in branch transformation initiatives. In addition, many cash recycling ATMs can cater for the needs of small business enterprises, offering 24/7, secure access to merchant service-based facilities.
Q: What kind of savings can an ATM operator expect to see in an average cash recycling deployment?
A: This varies, depending on the region and country in which we deploy cash recycling. Every market is different, for example in South East Asia the volumes of cash are much greater than Europe. Looking across a range of customer deployments, on average we observe up to a 50 percent reduction in cash-in-transit costs.
Moreover, we do see some customers increasing their ratio of sales to fulltime employees; as staff reduce the time they spend processing and handing cash in the branch, they are freed up to focus on delivering great customer service and revenue generating activities.
Q: Can some ATMs be retrofitted for cash recycling, or is replacement always required?
A: We offer FIs and IADs either a full-function cash recycling ATM, or an upgradeable module that simply requires a cassette-swap as and when a bank is ready to roll out cash recycling functionality.
This holistic approach is to ensure we give customers choice and flexibility and that we help them future-proof their investment.
Q: Is maintenance much more expensive for a cash recycler than for an ATM? What about life cycle?
A: Cash recycling is a more complex technology, however, costs to maintain can vary depending upon a bank’s service contract, the configuration of the ATM, transaction volumes, consumer behavior and note quality.
Q: If I’m using cash management software, how do I adjust for recycling ATMs?
A: The combination of recycling technology and the latest cash management forecasting software such as OptiSuite is essential to a delivering a successful deployment. The software is flexible and can be adjusted as the FI’s ATM network grows or changes.
Q: How does remote monitoring and management change for a deployer who adds cash recyclers?
A: In principle, the model remains the same in that the monitoring of devices encompasses fault detection, note jams and general error reporting.
Q: As you know, there’s an ongoing debate about the future of cash. If I invest in cash recyclers, will they become less cost effective if cash use declines?
A: Cash is still king and will be around for a long time. The rise of digital payments has caused a decline in consumer cash payments in some countries, yet, despite this, cash in circulation is still growing globally.
Consumers want and demand choice, and cash will remain part of the wider payments ecosystem. It is not going to disappear in the short to mid-term. Financial institutions will still be expected to provide convenient access to cash and cash recycling ATMs will continue to provide the same benefits to financial institutions.
Q: If I’m considering cash recyclers for my fleet, what should I be looking for? Are there any recent innovations I should be aware of?
A: To benefit from cash recyclers, FIs need to fully understand and analyze their deposit and withdrawal transaction flows and volumes.
Data-driven analysis will allow them to make informed decisions on how to configure their machines. To support this, NCR has established a Cash Recycling Excellence Team — a team of experts who can work to help banks analyze the data and produce recommendations for their ATM fleet.