As previously mentioned, there are three main areas of cost concerns for FIs providing cash liquidity—cash management, system operations, acquisition and lifecycle. Let’s do a deeper dive into what’s involved with maintaining a cash ecosystem.
There are several expense categories for the management of cash for FIs:
- Replenishment costs, such as staffing and cash-in-transits fees
- Cash holding costs include forecasting.
- Cash handling costs include reconciliation, balancing, transport, dual controls and security
A good quality cash optimization solution can significantly reduce the cost of managing cash by measuring usage across all cash points and then forecasting and optimizing cash movements and deliveries to and from FIs and retailers. As cash distribution becomes more diverse through additional cash back opportunities in retail and FIs deploying sophisticated cash recycling ATMs, cash optimization technology is becoming an essential resource
System operations: Servicing and support costs include cleaning, first- and second-line maintenance, and the inevitable expense of replacements due to vandalism and accidents. Software subscriptions and licenses, consumables and monitoring add to servicing and support costs. Transaction costs also fall into this category, such as settlement, switching, communications and infrastructure and dispute resolution.
Acquisition and lifecycle: Change and lifecycle costs include feature maintenance, obsolescence upgrades and certification. Typical acquisition and deployment expenses for FIs are equipment, depreciation, software, feature creation, integration, customization, obsolescence upgrades, development and certification. In the areas of placement, security and facilities, the associated costs might be site survey and rental, installation, branding, electrical, environmental, physical and logical security, loss and compliance.
So, when you add up all these existing costs of maintaining a cash ecosystem, it’s no wonder that FIs are taking a hard look at optimizing processes that minimize the financial impact of these cost centers (or eliminating some altogether). The focus is on digital transformation, automation and other new technology and solutions, such as ATM as a Service, to help in this essential mandate.