The other day I ran a series of workshops for a major bank regarding a project affecting a number of different customer touch points. Given the wide-reaching nature of the project, attendees included employees from various divisions — retail, ATM, IT, business banking, cash, "alternative channels," innovation and so on.
At the end of each workshop people got up and left, only to be replaced minutes later by their colleagues from other departments, apparently more interested in the upcoming session than the previous group had been.
As I asked one of the attendees if he was staying for the next session he said, "Thanks for delivering the session Richard, been great hearing from you, but I'm from ATMs so the next session on retailer deposits doesn't concern me."
I was surprised by this, not least because it was highly relevant to his role. But then it got me thinking.
It's organizationally easier for a bank to manage its customer touch points and channels separately, but in fact this is counterintuitive. It's far better to manage the task that the customer is performing rather than the channel itself.
If you're wondering why, consider the answers to these questions: What is the customer trying to do and how does each channel support any given task? How can channels be complementary to each other rather than competing with other? Is a task started on one channel sometimes best completed through another?
Siloed thinking is exactly what I've encountered when I talk to people about cash recycling. This is a shame, not only because cash recycling should be thought of as a holistic process rather than a point issue, but also because it has the power to address the problem of managing the channel rather than the customer.
But why is recycling really necessary? Firstly, banknote volumes are rising, by 5-10 percent per annum in most developed countries. Even countries like Nigeria that have a push on cashless are seeing a 41 percent year-on-year growth in volume.
Then you have the unbanked population who only deal in cash — even in countries like the U.K. and U.S. they are still almost 10 percent of the adult population.
The de-involvement of cash processing from the central banks to the commercial banks and regulatory changes around clean note policies are driving the need for recycling of cash. And why do we have a fit note policy in most countries? Because of ATMs and their growth in number.
As branches develop, effective cash holding, handling and transportation needs mean that all 'points' are places in which to recycle, be they retailer POS, cash office, casino cash desk, back office, gaming table, bank teller, treasury, ATM, cash centers and even on CIT trucks.
Moreover, recycling of cash does not necessarily equal a self- or assisted-service cash recycler. Medium-sized bank note sorters and low cost desktop fitness note counters will help with recycling in certain reclamation points.
What's more, now that retailers and the gaming industry are recycling more cash themselves or transferring ownership of this function to a cash processor or CIT, less cash is coming into the branch.
While this supports banks' desire to achieve growth by becoming less transaction focused, it means that reduced cash volumes have to be carefully managed. Cue the importance of efficient cash recycling, to ensure that all channels are being used effectively. For example, despite getting fewer visits from CIT, banks need to ensure that ATM stock is maintained.
Another factor would be commercial banks' cash operations departments investing in expensive high speed sorters and setting up regional hub-and-spoke centres, whilst the retail banking department invests in bank branch recycling technology that will conceivably circumvent the need for so many CIT visits, as well as the obvious reduced cash center processing.
The benefits of getting it right are numerous. Cash holding volumes can be reduced, along with cash handling costs. As CIT time is reduced, so are transportation costs.
While harder to measure, the greater efficiency of the branch is equally, if not more, beneficial. Cash recycling technology means that banks no longer have to build branches that look like branches. They can create a more open plan space that's more conducive to building customer relationships, and creating capacity for staff that empowers them to sell.
I'll be considering the various facets of cash recycling in a couple more upcoming posts. Do drop me a line through the comment box below and let me know your take on the topic.