Blog: Why You Need to Get Your Cassettes in a Row

In 2024 the banking market will be faced with new and increased complications that will once again put pressure on operating models: costs of operations are likely to rise among the high deposit rates, increasing salaries, and financial institutions (FIs) preparing for loans failing. Meanwhile, revenue is expected to shrink due to low demand for loans. But there are other factors contributing as well: staffing issues, an uncertain regulatory environment, changing consumer behavior, and the challenge of integrating and implementing new technology.

However, amid these challenges, there are still steps banks can take to improve their operations. One of them is to evaluate their cash management and cassette configurations. Why? We are seeing a few key trends that create the potential for huge savings through cassette configurations that match local requirements better.

• While cash use is on a slow decline, it still presents great utility to consumers. After the pandemic we have seen cash use stabilize, indicating it is here to stay. 
• There are noticeable changes in consumer behavior impacting the utilization and transaction mix at the ATM. As such, configuration and cash management practices based on outdated assumptions may lead to a sub-optimal performance. 
• Inflation is driving higher average withdrawal amounts, which requires either more notes or a change in the denominations offered at the ATM. Meanwhile, the denominations deposited are often not in alignment with dispensed notes: For example, in the US, many FIs are dispensing $10s and $50s in conjunction with $20s. In contrast, deposited notes are more weighted towards $100s.
• The current high-rate environment has significantly increased the cost of cash. For an average ATM, the cost of cash is now 65 times as high as it was at the beginning of the latest rate cycle. 
• CIT costs are also increasing due to wage inflation and worker shortages. Meanwhile, there is a high portion of low utilization terminals as utilization rates can degrade over time if an FI is not monitoring and adjusting load amount and CIT frequency, so there is potential for reducing the number of CIT visits.
• Offering selectable denominations at the ATM has become the standard. If you don’t offer it, it could negatively impact the user experience. While most FIs in the US are offering this option, most are offering a combination of 20s and one or two other denominations.

How can an evaluation of your cash management strategy and cassette configuration counter the negative effects these trends may have on your operations?

Fulfill consumer expectations

Cash is here to stay, so to fulfill your customers’ expectations you need to continue giving them easy and convenient access to it. This includes the option to select their denomination mix at the ATM. Consequently, you want to offer cash services in the most efficient way possible. Optimizing your cassette configuration is one way to achieve that.

Enhance availability

We have already established that an unfit cassette configuration can lead to issues. The ATM may have to go out of service due to the deposit cassettes being full. For whatever reason this happens, the reduced availability of the ATM can lead to frustration on the side of the consumer. On the other hand, a well-adjusted cassette configuration extends the availability of the device and enhances the user experience. Additionally, the reduction in CIT interventions also means that fewer people are touching the ATM, consequently reducing the chance of a human error happening that could cause further problems.

Reduce the number of CIT visits

The reduction of CIT visits is perhaps the biggest advantage of an optimized cassette configuration as they are a big cost factor. There are a few ways this can be achieved:

• Adapt the types of denomination you offer at your ATM. We have discussed earlier that the volume of withdrawals has increased. By offering higher value denominations at your ATM, you reduce the number of notes necessary to fulfill such requests and your cassettes take longer to run empty, reducing the need for refills. 
• You may benefit from extending your all-in/deposit capacity with a second deposit cassette, especially in a cash-in/cash-out scenario. In many cases, a full cassette is the reason for a CIT visit. By expanding that capacity, you can also extend the time between visits. You can even continue to dispense the same number of denominations if you switch from a standard recycling cassette to a dual recycling cassette. (If you’d like to learn more about the different types of cassettes, check out this blog).
• Consider enabling recycling to further reduce CIT visits as your ATMs are refilled by your customers in a recycling scenario. If you do, consider adjusting the denominations you offer for withdrawal to the denominations that are most often deposited.

The potential for optimization through adapting your cassette configuration should be evident by now. But how do you determine the ideal configuration for each ATM? Stay tuned for the next installment of this two-part blog series, where we delve into this topic. Until then, kick-start your optimization journey by contacting your Diebold Nixdorf representative today!