With rates continuing to rise, financial institutions are looking for sources of idle assets. Most banks and credit unions first turn to Deposit Reclassification, which recovers low earning Fed balances by reclassifying transaction accounts into savings accounts. However, I want to talk about another source financial institutions can use to increase income: branch, ATM and vault cash inventory.
In this blog, I am going to address some commonly asked questions when I speak with banks and credit unions about their branch, ATM, vault and device cash management strategies and operations:
When is the best time to implement a branch cash management software?
In my experience, the best time to implement a cash management system is when the economy is in a rising rate environment, much like now. Based on what the Federal Open Market Committee (FOMC) recently discussed in their latest meeting, we can expect to see increases in rates over the next few years, which is why now is the best time to start thinking about your cash management strategies. Through optimizing cash inventory using C3 Financial, our clients usually experience a 20 to 30 percent reduction in cash levels.
Banks and credit unions should be looking forward to what the institution’s goals and needs are going to be within the next two years, because getting an internal team on the same page, going through Vendor Due Diligence and budgeting can take some time. A typical implementation of our cash management system, C3 Financial, takes approximately 90 days to data gather and a few weeks to finalize the database and train. Financial institutions must be making the decision to improve cash inventory management now to be able to fully capitalize on their non-earning assets in the rising rate environment. An institution can use those assets to invest in their loan portfolio or at a minimum, reinvest at the Fed Funds rate which is currently paying back 2.4 percent.
How can I better reduce my branch cash levels?
There’s a lot of great ways to reduce cash in your branches, but the number one way is to understand your overall cash usage. I’m talking about tracking your daily cash inflow and outflow down to the denomination on any particular calendar day across your entire network. This includes ATMs, recyclers, teller drawers and the vault. It can often be a little complicated to determine cash usage, so make sure to check out our blog about it: “Top Three Challenges & Solutions for Branch Cash Management.”
Having a cash forecasting software in place, like C3 Financial, helps you understand exactly how much cash you need to have at each of your unique branches, based on historical data. It also takes Cash in Transit (CIT) and delivery schedules into consideration, which can be difficult to consider if you are only using spreadsheets to determine cash usage and demand.
How do I make my cash management operations more efficient?
I love this question because the answer is easy - leverage the knowledge and capabilities of both your employees and your branch cash management software.
A common concern I hear surrounding branch cash management and software is, “how can software be smarter than the branch managers and tellers that know the ins and outs of the branches?” C3 Financial relies on the knowledge of your employees in addition to analytics and algorithms to be the most effective in predicting overall cash usage, and streamlining branch cash management operations ,such as the cash ordering process.
C3 Financial is flexible and able to work with centralized or de-centralized cash ordering workflows. However, C3 Financial still institutes a standard cash ordering process to make sure everyone is on the same page. This is done by automatically pulling data from your teller platform and integrating with money suppliers and armored car carriers. So whether your teller has been there 20 years or 20 days, you can be confident everyone is following the same efficient process to minimize the amount of excess cash at the branch.
If you’re interested in learning more about C3 Financial, and how it can effectively help you reduce excess cash and streamline your branch cash management operations, request a demonstration by clicking below and I’ll be in touch!