I believe that the job of any consultant is to look at things with a fresh pair of eyes and to question the way that things are done today, and to think about the way things could done be tomorrow. This is a blog that looks at what tomorrow potentially holds for cash recycling.
In the past 10 years, banks, retailers and casinos have invested heavily in both recycling and sorting technologies. This has enabled the local recycling of cash at the point of sale, the gaming table or at the teller position.
Over time, with the addition of various functions and features, recycling solutions have enabled a degree of self-sufficiency for the sectors mentioned above when it comes to managing their cash effectively.
Somewhat surprisingly though, in this same period, the volume of cash processed by cash centers has increased. Of course, we know that the volume of cash in circulation is going up, but surely we’d expect recycling to have made a sizeable dent inthe total amount processed by cash centers.
I offer two possible explanations for this. Either we are over-processing cash and wasting millions of dollars and man-hours in the process because of an affection for the barbed wire, guard-dogs, and machine guns of cash centers, or, and I believe this to be the most likely, we are not fulfilling the true potential of recycling technologies. This means that new end-to-end retailer-CIT-bank-vendor joint venture operating models need to emerge.
I say this because cash recycling should, and does, significantly reduce the need for cash centers, but only if the way in which recycling eco-systems operate is 100 percent fit for purpose.
Thinking about one of the main advantages of recycling technologies in relation to this point, namely the visibility it gives over how much cash you’ve got, this factor offers a number of avenues for managing cash in a way that is beneficial to the various parties involved in the cash cycle.
In retail for example, cash recycling could enable shopping mall retailer A to deposit cash into their accounts in real time whilst shopping mall retailer B fills its POS with the very same cash.
More specifically, this would come in the form of a 4-way joint venture arrangement whereby the CIT signs up a retailer to a five to seven year professional services cash processing & transportation contract.
In turn, the bank provides profitable commercial customer banking arrangements, the solution provider supplies hardware and maintenance, and the retailer receives same day credit and risk mitigation in terms of cash ownership.
Furthermore, each party receives management information on where their cash is, and cash is therefore recycled quicker, which is what most central/reserve banks are aiming for when de-involving themselves from cash processing.
Overall this model could work well to reduce the need for cash center involvement with collaboration between a bank, CITs, and the retailers. And the benefits in terms of cost, security and efficiency would be huge.
Of course, in operation such a model would necessitate that all-important intelligence layer that ties together every workstation, every machine, and every operator. Nevertheless, the possibilities are endless and with greater collaboration between banks, retailers, vendors and CITs, the true benefits of cash recycling will duly be realized.