Cash automation to improve branch productivity

One of the fastest growing trends in branch strategy is the implementation of cash automation for teller operations. These include new generations of cash dispensers and cash recyclers. There are five reasons commonly cited for justifying cash automation:

  1. Automated vault service. Cash automation devices can serve as the branch vault, allowing tellers to buy, and with recyclers sell, cash without involving a vault teller or supervisor.
  2. Improved transaction throughput. A traditional teller must count cash at least twice: to or from the drawer, and to or from the customer. Cash automation replaces one of these steps with what is generally a faster operation from a machine. The marginal benefit increases with the amount of cash in any given transaction, so it is greater for commercial transactions and night bags.
  3. Improved customer service. The theory is that time which used to be spent counting cash can now be spent interacting with the customer.
  4. Improved teller balancing. Since a machine is now handling the cash, teller balancing percentages should be higher.
  5. Universal staffing is more feasible. Traditional tellers who process a lot of transactions and balance all the time have skill, experience and self-discipline. These traits are not easy to replicate across an entire branch staff. Cash automation removes one of the more challenging aspects of teller work from the required skillset. In addition, cash automation can provide cash security in an “open” branch layout without a traditional teller counter.

Cash automation are expensive systems. Dispensers cost $15,000 to $30,000 per device, and recyclers cost $25,000 to $45,000 per device. In many cases management and/or interface software is required, adding another $1000 to $3000 per device. Freight and installation will add another $2000 to $3000 per device. Annual maintenance will be approximately 10% of the device cost. Fully implementing cash automation would mean a device for every two tellers, though something less than that is far more common.

While all the justifications above are valid and seem reasonable, the question should be: What is the actual benefit in the real world of my branch operations? Let’s take a second look at each justification in that context.

  • Automated vault support is an explicit benefit and may actually have additional side benefits. If it is simple and quick for tellers to get more cash during the day, they can carry less in their drawers.
  • Transaction throughput is a bit trickier. The improvement can only be realized when all tellers have a steady stream of customers. Are the tellers connected to cash automation actually doing more transactions than traditional tellers? Is this true (or not) on average, or only during peak times? If teller activity and staff forecasting are not being measured, there is no way to tell if cash automation is having an actualized benefit.
  • Improved customer service can also be more subtle than it first sounds. If time is being “saved” as proposed in reason #2, then it cannot also be “used” for customer interaction. A teller can either have a shorter transaction time and not interact more with the customer, or interact more but not save transaction time. They cannot do both.
  • Improved teller balancing seems obvious, but again the question is how is it realized in overall branch productivity? Tellers still have to reconcile a drawer, though it should be quicker and there should be fewer out-of-balance conditions. There is some new overhead associated with managing and reconciling the device itself. When the device is down what are the procedures and how well do tellers that have become dependent on automation perform? How accurate are traditional tellers now? The more accurate existing tellers are, the smaller the benefit.
  • Cash automation can be a contributing factor in a program to implement more of a universal staffing model. However, it is one piece of a much larger and complex plan. There is no question that cash automation changes the security equation for institutions considering an open branch layout, but at that point full self-service kiosks likely are also part of the consideration.

It is not the intent of this article to suggest that cash automation is not justified. In some operations and branches it no doubt can be of significant benefit. The point is that realizing a benefit may not be as simple as it sounds when the justifications are taken individually on face value. If you are not measuring what the branches and their employees are doing, how they are doing it and when they need to be doing it; how can you ever really know?

David Basri

David Basri

Mr. Basri has been designing and implementing software and process improvement for financial institutions for over 35 years. He has worked with, and gained experience from, over 500 institutions both ... Web: Details