Banking executives are increasingly being placed in a tough position. They are tasked with maintaining a profitable branch in an environment where operational costs are rising and traffic is declining. It’s an expectation that is challenging at best and can be seen as nearly insurmountable at worst. Whether the goal is to boost branch profitability, improve the branch customer experience, or simply alleviate operational staffing redundancies, cash recyclers are an option worth exploring. Automation can help ease the fiscal tug-of-war that management faces.
When considering the costs of cash—the portion of your operating budget spent on ordering, managing and processing cash inventory—labor is the single largest expense. Cash processing consumes valuable labor resources directly impacting payroll. Recyclers shave valuable seconds off each transaction — seconds that quickly add up to minutes a day. And when accumulated for multiple tellers, those minutes translate to significant time and labor savings that lower the cost of each transaction. But that’s only part of the equation.
By automating cash processes, the management team emphasizes the branch experience—allowing tellers to build a stronger rapport with customers while placing a premium on the in-person transaction. The strength of this tactic cannot be overstated, especially as the number of branch transactions continues to decrease. However, this same management team will be faced with another, far tougher question. From a 10,000-foot vantage point, how should staffing levels be affected by cash recycling and should it directly impact headcount?
Management has three strategic paths to explore:
1. Optimization of current staffing levels
In traditional branches, peak-hours staffing needs and time-consuming vault transactions make it difficult to schedule teller shifts efficiently. Recyclers keep a digital record of every transaction so they can serve as the second control in a dual-control transaction—head tellers and supervisors don’t need to be present for every vault-buy or sell. These senior team members can be made available to step in during high traffic periods, reducing peak hour staffing requirements. You’ll be able to staff more efficiently, while easily complying with security policies that control the way cash is moved and handled.
This is the least intrusive method—giving positive bottom line results—and is the version that we recommend.
"According to an FMSI Retail Branch study a 45.3% decrease in branch transaction volumes and a 90.1% increase in salary and benefit rates over the past two decades have driven the average labor cost per transaction up by 133.3%."
Eliminating full-time employees slashes payroll expenses and can be seen as necessary since labor costs dominate the branch-operating budget. There are two primary directions for management if this is the chosen path: wait for natural employee attrition or discharge branch staff directly. The impact of this measure has an immediate positive impact on the bottom line, but at what cost? It’s tempting to consider a cash recycler as a replacement for a teller, but it should be seen as a tool for sales and efficiency.
What do you give up in exchange for lower payroll overhead? Usually the quality of service suffers. Cutting headcount is only cost-effective if you can maintain the service your customers expect. Staff optimization is much preferred over position elimination.
3. Transitioning staff from full-time to part-time
This path creates a more flexible and efficient branch staffing model, lowers bottom-line benefit expenses, and reduces overall labor costs. After analyzing branch traffic patterns, part-time staff can be scheduled during peak hours keeping the customer experience as a top-of-mind priority while also limiting traditionally idle periods.
The three methods above are all viable options, however we’ve found that the preferred way is to focus on optimizing current staffing resources through the use of cash automation technology. You’ve already made a major investment in your existing team and giving them an opportunity to prove their value is the best course-of-action.
Next we'll take a closer look at how cash recyclers impact payroll by streamlining start and end of day processes.