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By rationalizing their network of ATMs, banks can remove redundant and underutilized machines and save on real estate, machine depreciation, and servicing and maintenance costs. Banks should also ensure that local management is incentivized to install ATMs only in locations where the returns justify the costs.

Many banks are already outsourcing basic elements of their cash operations, such as cash distribution and machine replenishment and maintenance. Some banks have gone a step further, passing responsibility for machine management, cash planning, and back-office activities to one or more external suppliers.

Outsourcing Transferring cash operations to third parties, such as CIT providers, can lower costs, as outsourced providers typically achieve significant economies of scale. By outsourcing cash operations, banks can incur savings of 15 to 20 percent, with equivalent or higher service levels.

However, as these providers grow, they are managing more and more of the cash operations, which can leave banks very dependent on one provider that could push up prices. In the U.K., for example, G4S has managed to establish a dominant market position, giving it significant negotiating strength in pricing discussions with

replenished, reducing the expense of physically refilling them and holding banknotes inside.

More intelligent monitoring of incidents at ATMs avoids the unnecessary dispatch of maintenance teams and could save 20 percent or more on maintenance charges. To achieve such savings, banks are identifying whether an incident can be dealt with remotely or requires first- or second-level maintenance. In most geographies, about 10 percent of callouts are unnecessary and an estimated 30 percent of all first-level maintenance efforts are redundant because the incident requires second- level maintenance.

By outsourcing cash operations, banks can incur savings of 15 to 20 percent, with equivalent or higher service levels.

Booz & Company

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