After the third Fed funds rate increase of the year, financial institutions should consider focusing on branch cash management initiatives that identify and minimize non-interest earning assets through optimizing cash inventory to ultimately reinvest it into lending and other investments. One of the most cost effective and efficient ways for a bank or credit union to reduce excess cash is by using a software solution. However, many institutions don’t know where to start when looking for a branch cash management software.
Here are five features to look for in a branch cash management software:
1. Track denominations and cash levels across the entire branch and ATM/ITM/Device network
One of the biggest challenges of branch cash management is understanding cash usage across all end points in the branch and at offsite ATMs. It’s important for a branch cash management software to be able to track the inflow and outflow of cash to provide accurate end-of-day balances. A software that acknowledges an institutions’ total cash usage by denomination, branch and/or device will help users optimize their cash levels and denominations across all cash end points.
2. Collect and analyze data on cash usage relative to historical pattern
Your branch cash management software should be able to forecast cash demand based on historical usage. The software should evaluate your recent historical usage and prior year usage, in addition to typical end-of-day balances and accurately forecast how much cash you need to order for your various cash end points. When implementing a new branch cash management solution, banks and credit unions should be prepared to input at least 90 days of end-of-day-balances to receive accurate guidance. A solution that provides cash forecasting without a minimum of historical data is going to provide faulty and unreliable cash trends.
3. Predict denomination needs based on statistical modeling, the branch’s actual cash replenishment cycles and demand volatility
Let’s take it a step further, the software solution you pick should understand the denomination usage and replenishment cycles of each cash end point. Not tracking denominations can potentially impact an institution negatively because underused bills sit in various cash end points and collect dust, which turns into excess cash. If a software can predict usage by denominations, it will prevent over ordering.
Over ordering can also be a big cash management mistake that is often driven by the fear of not being able to meet customer requests. Your software should be aware of your specific cash replenishment cycle and take any cash in transit (CIT) into consideration when providing recommendations. You branch inflow, outflow and end-of-day balances are not consistent year round, so your cash order shouldn’t be.
Much like any company supplying goods to customers, having too much inventory can be costly, and having low inventory can often negatively impact customers. Financial institutions are no exception when it comes to cash inventory levels. You should look for a branch cash management software provider that can understand and apply basic inventory management techniques. Also, ensure the software allows for the occasional outlying cash request, but will never run your branch or device out of cash.
4. Incorporates staff members’ knowledge and experience
It’s important that you don’t forget about your frontline team members when implementing a software that they will assist them with cash management. No piece of software can replace the experience and knowledge your branch managers and tellers bring to the table. However, look for a software that works well with the knowledge your people can share. For example, if there’s an event that happens in your community where cash usage goes up, your branch managers should be able to alter the guidance and then the application will adjust in the future from there.
5. Integrates with other cash vendors and software
Lastly, look for a software that integrates with your other branch cash management programs and processes to expand efficiencies across the entire branch network, as well as increase time savings for the finance and operations staff members. For example, integrations with your teller platform and armored car carriers creates a huge time saving for everyone.
Choosing the right branch cash management software for your branch network can be a difficult decision. It’s important to choose a software that meets your cash operation needs, but also optimizes your cash levels so you can turn any excess cash into an interest-earning asset. Don’t forget to make sure your software tracks total cash levels across your entire network, analyzes and makes accurate recommendations based on historical usage, understands denomination usage and replenishment cycles, integrates and allows for manual input.