Why good cash management is vital for banks in Australia

By : Cleopatra Mavredis

October 24, 2017 12:00 PM

Cash remains the payment method of choice for many consumers in Australia, according to the latest regional edition of the PYMNTS.com Global Cash Index.


The research showed that, throughout 2015, Australians made cash payments worth AU$143 billion (US$112 billion), while ATM withdrawals totaled AU$103 billion.


It's clear that cash remains an extremely important part of the payments mix in this market, despite recent growth in digital alternatives and contactless transactions.


For banks, this underlines how important it is to get cash management and self-service strategy right, particularly in a market like Australia, which presents some distinct geographical and logistical challenges.


Convenience and usability
One of the reasons why Australia continues to rely on cash is its unrivaled convenience and usability, not only for consumers but for small businesses, too.


Physical currency remains the go-to option for many low-value transactions in the country. Data from the Reserve Bank of Australia shows that the median value of cash payments remained consistent, at AU$12, between 2013 and 2016. Cash was used for more than 60 percent of transactions valued at AU$10 or less in 2016.


Speaking to PYMNTS.com, Raghavendra Bhat, Australia and New Zealand Banking Group's head of technology, pointed out that smaller businesses in both rural and urban parts of Australia are particularly reliant on low-value cash transactions.


"A lot of businesses in the service industry, like restaurants and mom-and-pop stores, prefer cash over cards so they don't have to deal with the interchange rates that are associated with [cards]," he said. "They generally incentivize people to pay in cash. If, for example, you use credit cards to pay for lunch, they generally charge you more to pay for that transaction."


It's not uncommon for some merchants, particularly smaller enterprises, to deal solely in cash. With businesses and consumers still so heavily reliant on this payment channel, financial institutions need to have reliable systems in place to ensure maximum cash availability via the self-service network.


Getting your customers the cash they need
Having a rigorous and reliable cash management strategy is particularly important in a market like Australia, where there are some notable challenges for banks to overcome.


In such a physically large country, providers must maintain a high standard of cash-in-transit (CIT) management and logistical control to ensure their ATMs are being supplied with the cash consumers need. Australia is also home to a number of remote locations where the delivery of key banking services may be difficult.


Deploying dedicated cash management and CIT solutions will put your business in a stronger position to achieve the right distribution of cash throughout your network. Automated statistical analysis supports effective demand forecasting, which helps to maximize efficiency for the business and availability for the consumer.


Furthermore, the automation of key processes frees up your staff to focus on more productive, revenue-generating activities such as sales and customer engagement.


As far as the ATM channel is concerned, cash machines continue to evolve and now offer greater functionality than ever before.


One function that could prove particularly beneficial for institutions targeting improvements in self-service is cash recycling, which can strengthen fraud protection by identifying counterfeit notes and also reduce CIT costs. Consumers benefit from increased cash availability.


ATMs have now evolved to the point that they are able to function like mini-branches, increasing the potential for banks to become more efficient in their physical banking network. With more transactions taking place in the self-service channel, staff can redirect their attention to more valuable activities.


These trends are hugely significant for markets such as Australia, where it's clear that consumers and businesses continue to recognize the unique value of cash and ATMs, so providers must ensure they are effectively meeting demand.

Cleopatra Mavredis

NCR Europe Self-Service Channel Management

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Cleopatra Mavredis is NCR’s Global Marketing Manager for Channel solutions and has more than 20+ years of experience in the ATM industry. NCR’s channel solution portfolio is comprised of APTRA Vision, Inetco Insight and OptiSuite solutions.