Originally published on Quantzig: Enhancing cash distribution with forecasts and levels for a retail bank
Revolutionary Solutions for the Banking Sector
Precisely forecasting cash demand in automated teller machines (ATMs) shares similarities with other vending machines, but with the added requirement of replenishing currency at predetermined intervals. Inaccurate forecasts result in significant costs, such as fees for unused cash stored in ATMs. Banks typically pay substantial fees for refilling and shipping cash, often storing excess cash in ATMs. With thousands of ATMs across the country, even slight operational improvements can lead to substantial profit increases.
Leveraging Quantzig’s supply chain analytics-driven optimization enables lenders to efficiently manage logistics operations. Utilizing advanced machine learning algorithms, Quantzig’s technology identifies usage patterns, allowing for frequent ATM reloads to reduce freezing and insurance costs.
Discover How Retail Banking Solutions Function
1. Customer-Centric Product Offerings: Retail banks offer a diverse range of financial products and services tailored to meet the needs of individual consumers and businesses, including checking accounts, savings accounts, loans, and investment options.
2. Accessible Banking Channels: In today’s digital era, retail banks provide accessibility and convenience through various channels such as internet platforms, smartphone apps, ATMs, and physical branch locations.
3. Compliance and Regulatory Standards: Operating within a highly regulated environment, retail banks adhere to strict compliance standards to ensure the safety and security of customer funds and financial transactions.
4. Personalized Financial Advisory Services: Retail banks offer personalized financial advisory services to assist customers in achieving their financial goals, provided by certified professionals such as Certified Financial Planners (CFPs).
5. Risk Management and Financial Stability: Retail banking institutions actively manage risks associated with their operations and employ robust risk management frameworks to mitigate risks and maintain financial stability.
Understanding How Retail Banks Generate Income
1. Interest and Fee-Based Revenue Streams: Retail banks generate income through interest earned on loans and fees charged on various financial products and services such as account maintenance and wire transfers.
2. Investment and Asset Management Services: Retail banks offer investment and asset management services, generating income through management fees, brokerage commissions, and performance-based incentives.
3. Corporate and Commercial Banking Activities: Retail banks engage in corporate and commercial banking activities, earning income through interest earned on commercial loans and fees for treasury and cash management services.
4. Foreign Exchange and Remittance Services: Retail banks facilitate foreign exchange transactions and remittance services, generating income through currency exchange spreads and transaction fees.
5. Diversified Revenue Streams and Cross-Selling Opportunities: Retail banks capitalize on cross-selling opportunities by promoting a diverse range of financial products and services to customers, enhancing revenue streams and strengthening their competitive position.
Key Challenges Faced by the Client
A leading Australian bank partnered with Quantzig to optimize branch and ATM cash management while reducing costs. The bank sought to boost productivity, improve service delivery across its ATM and branch networks, and lower operational expenses.
Quantzig’s Supply Chain Analytics Solution for Banks
Quantzig provided a 3-point approach to address the client’s challenges:
1. Vault Management: By implementing a vault management system (VMS), Quantzig enabled proactive cash management, allowing for optimal cash holdings to avoid shortages and maximize cash availability.
2. ATM and Branch Cash Handling: Quantzig aggressively managed ATM and branch cash requirements to optimize cash inventories and minimize excess cash.
3. Forecasting Tools: Quantzig developed forecasting tools using time-series and regression machine learning models to predict cash demand, allowing for efficient cash management strategies.
Impact Analysis of Quantzig’s Supply Chain Analytics
Quantzig’s solution enabled the client to introduce a just-in-time (JIT) variable scheduling service for ATM servicing, resulting in cost savings and minimized excess cash. By focusing on cash management and implementing Quantzig’s solutions, the client achieved dynamic cash limits based on usage trends, leading to reduced daily cash inventory and increased profits.
Key Outcomes
Quantzig’s vault management system and forecasting techniques provided estimates of cash demand, allowing traders to plan cash holdings effectively, maximize profits, and optimize cash storage.
Broad Perspective on Supply Chain Analytics in the BFSI Sector
Integrated cash requirement forecasting and inventory optimization models streamline cash supply chains, reducing idle cash levels without compromising customer service. The adoption of such models significantly reduces idle cash at ATMs and branch locations while maintaining cash availability and customer satisfaction.
