The Top 3 Ways to Increase Cash Transparency in Your Bank’s Supply Chain

Bank and credit unions have some of the most intricate and heavily involved supply chain systems in the world. The main influence is the increased use of more sophisticated technology such as ATMs, video tellers, recyclers, and kiosks.??

Financial Institutions and retailers have similar supply chains, with retail products and currency moving in much the same way. However, understanding the cash supply chain can be more complex for banks and credit unions, as the necessary transparency is often hindered by the way departments operate independently with infrequent communication.?

If this sounds like a familiar pain point you’ve run into at your own FI, read on. Let’s discuss three features banks and credit unions should look for in a Supply Chain Management (SCM) cloud software to help improve cash transparency across the entire enterprise.?

FI Solutions: Optimizing Cash Transparency?

SCM cloud software is used by almost every other industry today to increase overall transparency in the organization, but banks and credit unions are still behind the times in adopting this technology. Here’s how FIs benefit from this technology.?

1. Cash Forecasting?

The first feature you should ensure a SCM software has is forecasting capabilities. Remember, almost every other industry is leveraging forecasting tools to keep enough inventory on the shelf to meet customer demand while keeping storage costs low. The same principle can be applied to currency.??

A cash forecasting tool allows your financial institution to order cash based on historical data and actual cash demand and usage down to the denomination level at every cash end point. This makes it so that you don’t have extra cash sitting idly in vaults, but still have enough cash to meet customer demand in a specific branch or ATM. Forecasting software also increases cross-departmental communication by providing each department involved in the cash supply chain insight and visibility into cash usage across the organization.??

Lastly, a cash forecasting feature increases cash transparency by changing the way a bank or credit union places a cash order. Banks and credit unions can choose whether to use a decentralized approach, where each branch manager is responsible for ordering their own cash, or a centralized approach, where one person orders the cash for all branches.?

2. Armored Car Carrier Integrations?

Another feature banks and credit unions should look for in SCM cloud-based software is integration with armored car carriers. Not only does this allow your financial institution to place cash orders directly to your armored car carrier with the same software that forecasts the cash, but it also allows them to make updates to cash orders.?

Here's an example: Hurricanes and severe weather events are inherently unpredictable, making precise forecasting challenging. However, SCM software offers valuable flexibility to adapt quickly when such drastic weather changes impact cash flow. In 2023, Hurricane Lee rapidly intensified from a Category 1 to a Category 5 storm within 24 hours, striking the Northeastern part of North America. Banks and credit unions utilizing SCM software with an armored car integration were well-prepared. They could efficiently place orders remotely in advance by increasing forecasted guidance or using their preferred weather event standard amount, ensuring that their branches and ATMs were proactively serviced despite the fast-moving storm. ?

Another benefit to having an armored car carrier integration in your SCM software is that it allows you to optimize delivery and pick-up schedules based on cash demand and cash-in-transit which minimizes fulfillment costs.???

3. Real-Time Reporting and Analytics?

The last feature you should look for to help improve cash transparency across your organization is real-time reporting and analytics. It is important to be able to look at your SCM software and understand each location’s current cash position at any given moment. It is recommended that you run reports that allow you to see cash demand and usage over a specific time frame, in addition to how much cash was ordered. This ensures that your branches don’t run out of cash or hold excess.?

This type of reporting also allows you to have visibility into potential outlying events that could impact your cash order. For example, we saw with the COVID-19 pandemic that there was a huge initial spike with customers and members taking more cash out of ATMs than what normally would have been forecasted. However, as vaccines rolled out and society adjusted, many banks and credit unions were able to look at cash usage analytics to decide if they should continue to keep more cash at their branches, or if cash levels had normalized.?

How to Get Started?

While banks and credit unions continue to adopt more technology to better the customer experience, it is equally important that they have visibility and insight into this more complex cash supply chain and overcome transparency challenges. That’s where logicpath steps in. Logicpath is a cash forecasting software company owned by Loomis US, specializing in helping Financial Institutions gain better transparency over their cash (and more). Request a demo here to get started.?