Uwe Krause heads marketing for the banking division of Wincor Nixdorf International in Germany. To submit a comment about this article, e-mail the editor.
It wasn't until 1997 when cash-recycling ATMs, developed in the 1970s in Japan and Korea, made their way to Europe. They began cropping up, primarily, in France, the Netherlands, Switzerland, Germany and Italy.
Yet up until recently, only 10 percent of all ATMs in those countries accepted automated deposits, and only about half were able to recirculate money after the notes and coins had been checked for quality and forgery.
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New branch concepts and steadily increasing cost pressure soon gave a boost to automated deposits, which were originally described as superfluous and impractical.
Studies show that 96 percent of all deposits in Europe are made via self-service. And contrary to popular belief, business customers are not the only ones to use deposit technology. In large cities, such as Berlin, it is predominantly private customers who make self-service deposits.
It's not surprising that recycling systems have a higher growth rate than conventional ATMs in Europe, even though the latter are far higher in number. But it is becoming increasingly obvious that both cash systems complement each other usefully.
Cash-recycling systems are fail-safe, and the emergence of cassette technology, which results in higher recycling volumes and shorter transaction times, has also aided cash-recycling acceptance rates.
New cassette-based and drum-based systems are making their ways into the market. Sales for cassette-based systems are up, but the same is true of drum-based systems, and for good reason. With the same required space, the drum can accommodate more denominations, and experts see the ability to handle up to five denominations as a necessity for branches interested in cash recycling. Five cassettes are virtually compulsory, since everything depends on greater flexibility where the number of denominations paid in and out is concerned.
Furthermore, networked devices make it easier to comply with money-laundering regulations because they automatically reject invalid deposits. Previously, breaches were only noticed during post-processing.
Rigorous fight against costs
Even more important are the quantifiable advantages financial institutions of all sizes are now experiencing with cash recycling. Consistency pays off, in terms of higher self-service quotas for deposit and dispensing transactions, and in terms of cost.
Dresdner Bank was the first major bank to completely change over to recycling technology. The bank now saves around €2 million annually.
On average, the intervals for cash replenishment and removal at ATMs increase by a factor of between 3 and 4. With cash-recycling ATMs, instead of twice a week, cash-in-transit companies or employees only need to go to each location every other week.
The cutback results in savings of €600 per month. In ideal locations, where there is a high degree of correspondence between money paid in and money paid out, it is even possible to reach intervals of five weeks and more.
Around 80 percent of a bank's ATM savings, once cash-recycling is implemented, can be traced back to the automation of cash handling. This not only eliminates the need for post-processing in the form of sorting, checking and the effort of searching for discrepancies, it also significantly reduces staff time at the teller terminal or cash desk.
One savings bank with a balance-sheet total of €1 billion was able to reduce two-full tellers. In relation to night safes, another financial institution saved €16,000 annually on each installation.
Payback period of 2-3 years
Investments in recycling technology pay off after two or three years — faster than some decision-makers in banks ever thought possible.
After 10 years, the technology is no longer in its infancy. Retail Banking Research expect cash-recycling at self-service terminals in Europe to grow 30 percent in 2008. According to current estimates, that rate of growth will increase by 170 percent by 2010 and 215 percent by 2017.
The positive trend can be attributed to several factors. New branch structures, whatever they may look like in detail, envision the shift of routine transactions to self-service terminals. The move affects coin acceptance, and cash-recycling systems, including a coin function or a coin sidecar, already have been introduced in the market.
The European Central Bank also has provided a secure basis with its recycling framework.
"It significantly broadens the maneuvering room for banks and savings banks in terms of shaping their cash processes," said Niels Riedel, a banknote expert at ECB.
In addition, financial institutions are increasingly putting their faith in recycling technology.
Most systems rank with a 96 percent to 97 percent level of reliability. And integration of recycling systems into cash management helps optimize processes.
In light of ongoing cost pressures, this will be reason enough for combined deposit/dispensing machines to gain ground and replace basic cash dispensers. The high investment costs pale in comparison to the rewards.
Multifunctionality also is playing a role, with more and more demands from domestic and international markets. Similar to basic cash dispensing ATMs, recycling systems are being equipped with passbook processing and check-deposit functionalities in order to completely automate cash processes.
Single-purpose or multifunctional — the general conditions on site play an important role in this decision.
