banks, as well as creating a single- point supply risk.
Multi-Bank Cooperation By collaborating on cash processing, distribution, and machine management, banks can cut the cost of their cash operations by an estimated 20 to 30 percent—and avoid some of the risks inherent in outsourcing. A multi-bank cash utility carries out cash planning, machine monitoring, cash processing, cash distribution, contract management, and even reconciliation and reporting. Confidentiality of cash stocking levels (a competitive secret for many banks) can be maintained through the use of bank-specific parameters that are held by the utility on a highly confidential basis.
Such cooperation also helps banks and retailers rationalize on a wider scale, to reduce the number of ATMs in a particular area while increasing the traffic at each machine.
To bring costs down further, the utility may consolidate CIT operations within specific geographies and engage a single CIT provider
to distribute cash for all banks (and potentially retailers) in a particular region. This simplifies the logistics of moving cash to and from ATMs, reducing travel time and expense. Also, with a greater number of machines to service in a given area, maintenance teams should be more fully utilized.
And rather than have a single CIT provider for all of its national cash operations (as is the case for many banks at present), a consortium can increase market competitiveness and reduce single-supplier risks by using a range of different suppliers, each serving a different geographic region.
Joint processing of cash can also help a utility decrease its total number of cash centers. This makes more efficient use of existing assets and spreads the high fixed costs of these centers over a larger cash volume.
In Australia, the four major commercial banks—ANZ, CBA, NAB, and Westpac—jointly own and use the cash outsource provider Cash Services Australia (CSA), which was established in 2001.
CSA provides cash supply chain management, including processing and distribution, which allows the banks to eliminate their in-house cash teams while maintaining full security and confidentiality. The Netherlands is planning a transition to a similar arrangement. Beginning this year, Geld Service Nederland (GSN) will deliver cash processing and distribution services for the three major Dutch banks: ABN AMRO, ING, and Rabobank.
In Finland, the three major commercial banks (Nordea, OP-Pohjola, and Sampo) have jointly owned and operated the country’s largest ATM network since 1994. Named Automatia, this partnership has enabled the banks to cut the number of machines by almost a third without any negative impact on customers’ service levels. Geldservice Austria is a similar initiative, largely owned by Austria’s Reserve Bank, demonstrating how cooperation between commercial banks and the reserve bank can bring down cash infrastructure costs.
Booz & Company