Why your financial institution could benefit from cash recycling

Published May 24, 2022

Cash handling can take time, cost money and add to the risk of lost funds, which is why many financial institutions and retailers are looking at cash recycling ATMs to improve cash handling.

Despite the rise of digital technology, ecommerce and contactless payments, cash remains king, even among younger customers. Although businesses have been expanding into other digital payment options, predictions of a cash society are unlikely to become real in the foreseeable future.

Data from the U.S. Federal Reserve finds that cash accounts for around 30% of all retail spending – which puts it higher than digital purchases. However, digitization is still having an impact. People’s experiences have been shaped around the rise of technology. They expect speed, accuracy and convenience – even when dealing with more traditional forms of payments, such as cash. And it’s not just Gen Z, these trends extend to older consumers such as generation X and the baby boomers who grew up in a more traditional and much less efficient consumer environment.

Handling cash creates problems for a business. It comes with all sorts of challenges and risks.  Reduction of cash on hand protects your staff and your business. Every stage which involves cash handling has the potential for cash leakages. This can come in miscalculations, errors, loss, fraud or other forms of criminal activity. Reduction of cash on hand protects your staff and your business.

What is cash recycling?

More and more financial institutions are implementing cash recycling ATMs at various points in their processes. RBR predicts that demand for cash recycling ATMs will increase by 25% by 2024. These self-service devices automate the task of accepting, validating, dispensing and managing cash transactions.  The ATM which securely stores and keeps an accurate account of cash on hand and automates the cash cycle. You will often find them in a branch or through-the-wall, but they are increasingly also appearing in off-site locations – such as retail outlets, hospitals or apartment lobbies.

Cash recycling ATMs allow for users to fulfil deposit and dispense transactions. Cash deposited is validated, sorted and stored within cash recycling cassettes, which makes these notes immediately available for the next withdrawal. Valid notes deposited get re-dispensed into the cash ecosystem and consequently reduce the frequency of ATM replenishments.

The cash cycle can extend across two main areas:

  • Front office: Handling cash in the branch can be a labor-intensive process. Staff take time managing cash, ensuring not too much cash is in the drawer and making changes – cash transactions with a teller take on average twice as long as other transactions. A cash recycling ATM can automate this process and offer more convenience and security to staff.
  • Back office: Manual preparation of funds and end of day cash handling, reconciliation and verification can be time consuming and stressful.
  • By encouraging customers to use cash recycling machines, manual cash handling can be significantly reduced and systemic errors which can harm productivity and performance eliminated.

A cash recycling ATM automates these processes, lessening the human element, improving efficiency and avoiding opportunities which can lead to cash leakages. With cash recycling machines on the rise, businesses are literally looking to cash in on the benefits they can bring.

Related: How National Bank of Egypt utilizes cash recycling ATMs

Benefits of cash recycling machines

Introducing a cash recycling ATM can have a number of benefits including streamlining processes, fraud avoidance and reducing the burden on staff.

  • Saving time: One of the biggest benefits from cash recycling is the time it saves staff. A cash recycling machine automates the cash cycle in a branch by swiftly accepting, storing and dispensing cash in a variety of denominations.
  • Increasing staff security: Human interactions – both from unintentional error to malicious actions such as fraud – can be avoided with the use of a cash recycling machine. Staff can make mistakes in the counting; money can go missing, and of course this is one point which criminals often target. This is the reason why cash is transported by security personnel using armour reinforced vehicles. Cash recycling ATMs allow businesses to keep cash out of sight locked in secure locations. The cash recycling machines dispense specific amounts of cash based on pre-set demands without exposing your cash inventory.
  • Reduces shrinkage: For financial institutions, cash shrinkage is an inevitable problem. This is the gap between how much money should be coming in according to the sales and how much is accurately counted. This can come in the form of miscalculations, errors with change and of course malicious skimming. Using a cash recycling machine or a cash recycling ATM within a branch effectively serves as an extension of the vault and allows cash inventories to be counted in real time. Because tellers and other staff no longer have to transport cash between one location and another it reduces those points at which cash shrinkage typically occurs.
  • Fraud reduction: Fraud is a constant and growing problem. There is between $50 million and $200 million worth of counterfeit notes in circulation at any one time with medium denominations as one of the most commonly counterfeited. Criminals and the government are in a constant arms race with the former attempting to develop ever more sophisticated fake notes and the government looking to ensure official currency is more difficult to emulate. However, for all the technology which goes into the war on counterfeit, a major area of risk is in human error. It will be your staff who will be on the front line and will have to spot counterfeit notes when passed over the counter.

This will depend on their own powers of observation which will always be imperfect. One of the big benefits of a cash recycling ATM is that it can automatically assess the validity of a note. This reduces the risk of human error and, assuming the cash recycling machine works as intended, should eliminate the risk of counterfeit notes being passed off as genuine.

Related: Cash recycling technology – best practices for customer acceptance and engagement

These benefits of cash recycling machines can be found in all areas of the value chain. It boosts productivity by freeing your staff to work on other areas, it improves morale, satisfaction and aids retention. Cash recycling ATMs improves fulfilment by around 1.3 weeks. That has a cost, efficiency and environmental impact. Cash recycling also improves availability by keeping the ATMs stocked with cash that can be instantly withdrawn vs cash deposit ATMs which just store the deposited cash for collection by CIT.

Meanwhile, it increases productivity, freeing up staff to work on more valuable customer centric tasks and reduces the cost of money lost due to issues in transit, fraud or human error. It creates a sustainable and efficient cash cycle which makes the business much leaner, keener, and meaner. For businesses looking to hold onto more of their cash, therefore, a good cash recycling machine is a must-have. 

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