Know your true member cycles for cash

by: David Austin

A key component of providing excellent customer service is a credit union’s ability to always meet its members’ cash needs. Most credit union executives acknowledge that there are recurring patterns throughout the year related to consumers’ withdrawal and use of cash, but their assumptions about these cash cycles—and when they actually occur—are often misunderstood or misdiagnosed.

For instance, credit unions often expect (and plan around) a significant increase in cash demand during the Christmas holiday season, but in reality, only about 40 percent of all financial institutions experience an increase in total cash demand during this time. What they likely will see is an increased demand for denominations, $100s or $1s (and even $2s), as many people give these denominations as gifts. Concurrently, branches may even see a corresponding decrease in the demand for $10s, $20s and $50s during the holidays. The branch’s total cash demand has not changed—just an influx in change at the denominational level.

So if the holidays aren’t peak cash usage times, when are they? Contrary to popular belief, total cash demand typically increases in February and the first part of March. This is driven by members who file their federal income taxes with a 1040EZ form and begin to cash out their tax returns. Furthermore, not only does total cash demand typically increase in February, but the use of $20s does as well, since many members opt to cash out their refunds through the ATM channel. Another example affecting a branch’s seasonality is geography. Depending on the foot print of a credit union’s branch locations, the start of summer or a school year can dramatically increase or decrease the level of demand for cash. Harvesting season can also be expected to drive an increase in cash demand on credit unions near farmers.


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