The amount of money required for withdrawals in each ATM is not set in stone. Previously, financial institutions refilled cash according to historical data and familiar patterns. Customers tended to withdraw more just before the holiday season and less on regular weekdays. The number of customers and the amount they withdrew also depended on the location of the ATM. All these numerous factors make it rather tricky for banks to figure out exactly how much money to deposit.
Good planning when it comes to ATM refills is also required to improve customer satisfaction. ATMs that run out of money exactly when someone is in a critical situation will leave the customers unhappy and make them think twice before revisiting the institution’s ATMs.
One thing that emerged as a ray of hope for banks is professional ATM cash forecasting done by software with specific algorithms. Artificial Neural Networks (ANNs), a type of function approximators, have become vital in the financial sector. They make use of historical data to create accurate decisions regarding the future.
A specialized Data Scientist could be employed to operate a software equipped with ANNs to make precise predictions regarding the ATM’s money requirements. Let us see how such an ATM cash forecasting will improve the data presented by the bank reconciliation software.
Increase profits and reduce costs
ATMs often function at one of the two extremes. Either they have too much surplus cash in the ATM lying unused, or they quickly run out of money. Several financial institutions believe that it is better to overfill the Automated Teller Machines than not have anything to give their customers. Because of this, banks often have as much as 40% more than the required amount of cash in their ATMs.
Running out of cash is also unprofitable for the banks since they will miss out on withdrawal charges that the customers would have paid otherwise. Running out of money also means that the bank is making unplanned refill trips and increasing their expenses.
Sometimes, banks even decide to refill all the ATMs at one go, thereby increasing the amount of unused money lying in some ATMs. This extra cash, when used for other purposes such as loans, could have been expanding the bank’s profits.
Algorithms that contain ANNs will study historical data, analyse it and give predictions for the future. This software can help determine precisely how much money one particular ATM requires or can cover multiple similar ATMs.
A human element would be extremely beneficial to tweak the results according to recurring trends such as increased demand during the weekends and celebrations.
A sound cash forecasting system in place will help the bank prevent overfilling every time. There will be extra money in the firms to be utilized for other purposes. These systems can also determine the dates for depositing cash in the ATMs. Unnecessary frequent refill trips can be minimized using this.
Increased Efficiency
ANNs can be fine-tuned even further to determine the precise route that the bank must take from the collection point to the ATMs, which will effectively help in refilling several ATMs at once. It can also predict the ideal time during the day when this refill can be done without interfering with the customers’ busy schedules.
Financial Institutions can make use of this forecast to renegotiate pricing and payment with their Cash-in-transit (CIT) services. Instead of paying them for every trip, banks can now pay a fixed monthly charge.
Summing up
Making use of a reputable Cash Management System is essential in this day and age. Having a program in place that can determine the amount of cash each ATM requires will cut down the bank’s losses and unnecessary expenditures. Cash forecasting reports can be tailor-made for each ATM, thereby increasing the bank’s profitability from all directions.
