This story is excerpted from “Deposit Automation: Remaking the Consumer Experience,” a guide available for free download after registration.
One of the most talked about components of deposit automation is cash recycling, or the circulation of cash within a single environment. Cash recycling offers a number of benefits for financial institutions. Employed at the ATM, cash recycling can dramatically reduce the need to replenish cash supplies.
“Cash recycling operates just like a cash drawer in a register,” said Thomas Freas, director of sales for Cash Code, a bill-validator manufacturer. “The cash that’s taken in is the same cash that is dispensed.”
Cash deposited at an ATM does not necessarily have to be dispensed at that ATM. The cash that goes into the ATM could also be dispensed by the teller. Cash recycling devices are being used to automate the teller line as well, yielding some obvious and not-so-obvious benefits.
Efficient cash management
Recyclers can quickly sort cash by denomination, check the fitness and authenticity of notes and shave minutes or even hours off the time needed to balance the drawer. According to research conducted by Diebold, the typical teller spends at least two hours per day counting cash.
Without cash recyclers, customer-service representatives typically arrive about a half-hour ahead of a branch’s opening to manually stock their cash drawers. Three to seven times throughout the day, the operational staff performs the vault buy-and-sell process. During that time, two key employees must remain in dual control while tellers close their windows to manually verify cash totals. The entire process can take up to 30 minutes at the busiest time of the day.
While all of that is going on, the large amount of unsecured cash being distributed is visible to customers, posing a very real security risk. In addition, customers aren’t exactly pleased when they see a teller who can’t help them.
At the end of the day, tellers often stay past the bank’s closing to count the money in their drawers. If they don’t come up with the right amount, they have to retrace their buys and trades with other representatives throughout the day to find the cash error.
With teller automation via cash recyclers, tellers can reduce the time needed to manually count cash and don’t need to restock drawers. Instead, tellers receive money, place it in the recycler and then let the recycler do the work of counting and dispensing.
“Cash recyclers create sales referrals,” said Brian Pilla, director of marketing and deployment at Duluth, Ga.-based NCR Corp. “They create opportunities for additional sales or position customer experiences differently. I don’t have my head down counting stuff. I provide a different level of experience when I don’t have to count money.”
Having cash stored in just the cash recycler and the vault means that FIs can better judge how much cash should be sold or ordered, allowing staff to be more efficient in the management of the branch’s change fund and keep the branch within its total branch cash limit.
That dramatically reduces cash management costs, said Mike Shirk, director of deposit automation strategy with Diebold. Cash can remain within a branch rather than being taken from the ATM by a CIT company, circulated and then returned to the branch.
“Now they can have additional technology, like denomination and fitness sorting, a tracking system for the cash coming in and greater storage capacity. It leads to one less trip they have to make back to the vault,” Shirk said.
Decreasing lost funds and theft
Cash recyclers take the element of potential human error out of the equation, so tellers no longer have to worry about their cash drawers being short at the end of the day.
Additionally, cash recyclers also can help guard against robberies. The devices are typically connected to an alarm and have advanced duress functions. They also can protect against embezzlement since they automate the cash-collection process.
Customers and members might not notice their FI is using a cash recycling system, but they will notice, and appreciate, shorter lines that move quickly and a teller who focuses on them and not just the cash.
“It speeds up the whole process,” said Alan Walsh, vice president of banking, Wincor Nixdorf USA. “That’s what customers want. They want to be able to walk in, do their transaction and leave again.”
Justifying the bottom line
In the current economic climate, one of the main questions FIs struggle with is how to make the best use of the efficiencies gained via deposit automation and cash recycling in order to justify the expense of new equipment.
For banks and credit unions that decide to take the plunge into cash recycling, the investment can be significant, said Brian Johnson, vice president of branch operations with Arizona State Credit Union. But he said his credit union doesn’t look at it from a ROI perspective.
He said he sees the main benefits as added security, a smart part of a risk-management plan. Beyond security, Johnson sees value in never having to close down a teller line to get more cash while customers are waiting. Those kinds of benefits are hard to measure but add up for customers, Johnson said.
“There are no windows closing in front of members,” he said. “We spend more hours with windows open. Customers can bring in a lot of cash, so it’s good to know that we can throw it in a recycler, which will count it right up.”
/ Gary Wollenhaupt is an experienced writer and editor, with a background as a daily newspaper reporter as well as corporate and agency public relations and marketing. He is constantly looking for affordable green upgrades to make to his home in eastern Kentucky.