How did we improve distribution plans of cash from vaults to branches & ATMs using forecasts and cash levels for a major retail bank?

Oct 7, 2022

Highlights of the Case Study: 

Particulars Description 
Client A major Australian bank with Quantzig to provide more optimized and efficient servicing with branch and ATM cash management at a reduced cost. 
Business Challenge An Australian bank was facing the constant problem of boosting productivity, staying ahead of the curve, and improving service delivery across its network of ATMs and branches while also reducing costs. 
Impact Quantzig’s supply chain analytics solution allowed the client to introduce a just-in-time (JIT) variable scheduling service to most of the bank’s ATMs. The client could achieve a reduction in ATM servicing costs. 

Game-Changing Solutions for the Banking Industry  

The requirement for precise forecasting of cash demand in automated teller machines (ATMs) is the same as it is in other vending machines. The main difference is that currency must be supplied after a predetermined time. A significant amount of costs result from inaccurate forecasts. When there is a high forecast and a high amount of unused cash stored in the ATM, the bank is charged fees. The bank covers various refilling expenses depending on its agreement with the money delivery operator. Typically, banks pay a sizeable sum in set fees for the refilling and additional fees for the shipment with security arrangements. Some banks may keep 40% more cash in ATMs than is needed, and banks may have thousands of ATMs located all over the country. Therefore, a slight improvement in business operations would result in increased profits. 

However, by utilizing Quantzig’s supply chain analytics-driven optimization, lenders may efficiently manage their logistics operations. Quantzig’s technology can determine the suitable method to track the usage pattern with the help of cutting-edge machine learning algorithms, and frequent reloading of ATMs would lower freezing and insurance costs.

The Challenges of the Client 

A major Australian bank partnered with Quantzig to provide more optimized and efficient servicing with branch and ATM cash management at a reduced cost. The bank faced the constant problem of boosting productivity, staying ahead of the curve, and improving service delivery across its ATMs and branches while lowering costs. Using projections, the client enhanced their cash distribution plans from vaults to branches and ATMs. 

The client approached Quantzig for supply chain analytics solutions to identify and minimize non-earning assets (such as cash dispensers, unnecessary or surplus cash in ATMs, vaults, and teller drawers), optimize cash inventories, and redeploy the excess cash effectively through investments and loans. The client wanted help to manage cash efficiently and track the data that indicates information about money managed up to limits, not down-to usage driven levels, resulting in excess idle cash at various points in the supply chain. 

Our client was struggling with the following issues.  

  • Determining usage of cash at a particular location 
  • Setting up cash limits 
  • Controlling the cash ordering process 

Quantzig’s Supply Chain Analytics Solution for Banks 

Quantzig offered a 3-point approach to the client based on the problem statement – 

The first strategy involved vault management. Cash traders used an internal vault system to predict the amount of cash at each depot. The vault management system (VMS), used to manage the physical packing, transportation, and cash processing, was tightly connected with the vault system. By giving analysts access to estimates up to 20 days in advance, this method allowed traders to be proactive and take the best possible measures to avoid cash shortages and maximize cash holdings. 

The handling of ATM and branch cash was the second essential part of the strategy. The Quantzig ATM and branch cash management team aggressively handled the bank’s ATM and branch cash management requirements in a manner similar to how the cash traders actively controlled the bank’s vault requirements. 

Quantzig also provided forecasting tools for cash demand, including time-series and regression machine learning models. Analysts worked on the demand for a single ATM to create a model for the available data set. 

Impact Analysis of Quantzig’s Supply Chain Analytics in Banking  

Quantzig’s supply chain analytics solution allowed the client to introduce a just-in-time (JIT) variable scheduling service to most of the bank’s ATMs. The client achieved a reduction in ATM servicing cost savings.  Moreover, the client could minimize excess cash and maximize profits after focusing on cash management and implementing straightforward solutions. The client made cash limits dynamic and set them based on monthly or weekly cash usage trends and minimized daily cash inventory. 

Our solutions unlocked the following benefits for the client.   

  • Dissected the cash flow data to indicate the net inflow or outflow of cash 
  • Analyzed daily trends and demands on special local events such as national holidays or any county fair 
  • Managed, tracked, and reported the entire cash order process 
  • Streamlined and optimized cash ordering process 

Key Outcomes 

Optimizing service delivery across ATMs and branch networks requires an integrated cash management software to manage bank branch orders, cash holding, and clearances and to forecast the ATM cash requirements for the bank’s ATM network. Quantzig’s vault management system and forecasting techniques by leveraging the time series analysis and regression modeling provided estimates of the demand, allowing traders to plan cash holdings accordingly. In this way, the client could maximize profits, optimize cash storage, and implement straightforward solutions. 

Broad Perspective on Supply Chain Analytics in the BFSI Sector 

The branch and ATM networks use an integrated cash requirement forecasting and inventory optimization model to streamline the bank’s cash supply chain. The adopted model aims to reduce the idle cash levels at both branches and ATMs without lowering the customer service level (CSL) by dispensing the correct quantity of cash at the right time and place. ATMs and branches are both subjected to the integrated model at once. The findings showed that the integrated model significantly reduced the amounts of idle cash at ATMs and branch locations while maintaining cash availability and, consequently, customer happiness. 

Key Takeaways 

Quantzig supply chain analytics solutions provided the following benefits to our Australian banking client: 

  • Clear visibility into the cash inflows and outflows 
  • Analysis of daily, weekly, and monthly trends and demands patterns on local events such as national and regional holidays or any county fair 
  • End-to-end vigilance on the entire cash order process 
  • Optimization and streamlining of the cash ordering process 

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