Retail banking executives are facing unprecedented challenges in the current banking industry landscape. For financial institutions of all sizes, rising operational costs and declining branch traffic have made it imperative for banks and credit unions to find innovative ways to maintain profitability. One approach with a high potential for cost savings is optimizing teller performance through banking process automation.
Time is Money – The High Cost of Cash Handling
Cash handling is one of the most labor-intensive processes in a bank branch. Managing, ordering, and processing cash inventory consumes valuable time and resources, making labor the single largest expense in cash operations. These tasks strain branch operating budgets and divert tellers from customer-focused activities.
Banking Process Automation as a Labor Cost Solution
Implementing cash automation technologies, such as teller cash recyclers (TCRs), can significantly reduce the time tellers spend on cash handling and management. When multiplied across multiple tellers and transactions across a branch, the time savings translate into substantial labor cost reductions. Here are some of the labor-saving opportunities:
Customer Transactions
Teller cash recyclers automate cash counting and sorting during customer deposits and withdrawals, allowing tellers to complete transactions more quickly and accurately. By shaving valuable seconds off each transaction, these machines enhance teller performance, adding up to minutes per day in time savings.
Internal Branch Cash Processes
Branch cash management involves far more than processing customer transactions. Behind-the-scenes procedures make up a large percentage of labor spend but they also offer the largest potential for labor savings.
Traditional (i.e. manual) cash processes are prone to human error, so controls were built-in to add accountability and reduce risk but at the price of maximum human effort. Cash automation speeds up cash transactions and virtually eliminates human error but it does something even more impactful — teller cash recyclers maintain a digital record of every transaction. By keeping an accurate account of cash inventory at all times, TCRs significantly reduce hours of valuable labor required for many internal branch processes. Here are just a couple:
- Dual Control – The electronic journal on a TCR meets the requirement for a second verification or control in a dual custody transaction. Dual control activities are not only time-consuming but require management staff, the most expensive labor on the payroll. By acting as the second control in a transaction, TCRs allow managers and supervisors to focus on more strategic tasks, further optimizing labor resources.
- Vault Buys and Sells – Cash recyclers reduce time-consuming and labor-intensive vault transactions by as much as 80%. As described earlier, TCRs allow individual employees to manage vault transactions. But they also drastically reduce the frequency of vault activities, how much depends on how TCRs are implemented. As a replacement for cash drawers, a cash recycler is essentially a vault at a teller’s fingertips, securing a higher volume of cash at the teller line and eliminating the need to manage a drawer limit. Even used as a shared vault by multiple tellers, a TCR, allows a teller to complete a vault buy or sell quickly, without needing a supervisor or manager to assist.
Strategies for Optimizing Branch Staffing
Integrating cash automation machines requires strategic decisions regarding staffing levels. Here are three paths to consider:
1. Optimize Current Staffing Levels
Cash automation technology enables tellers to handle transactions more efficiently, reducing the need for additional staff during peak hours. By reallocating tasks and leveraging technology, banks and credit unions can improve service levels without increasing headcount. Tellers can focus on building stronger relationships with customers, enhancing satisfaction, and potentially driving more revenue.
2. Transition Staff Roles
Rather than reducing staff, organizations can retrain employees to take on roles that add more value to the customer experience. For instance, tellers can be trained to provide financial advice, support digital banking services, or engage in sales activities. This not only preserves jobs but also enhances the FI’s service offerings.
3. Implement Flexible Staffing Models
Analyzing branch traffic patterns allows branches to adjust staffing models accordingly. Transitioning some full-time positions to part-time can align staff availability with customer demand. Part-time tellers can be scheduled during peak periods, ensuring high teller performance when it’s most needed while reducing labor costs during slower times.
4. The Preferred Approach: Staff Optimization Through Cash Automation
While all three strategies have merit, optimizing current staffing levels through banking process automation offers the most significant benefits without the downsides of staff reductions. This approach maintains employee morale, preserves the quality of customer service, and maximizes ROI in both staff and technology.
Facing rising operational costs and changing customer behaviors, banking process automation with teller cash recyclers is a viable strategy to enhance teller performance and reduce labor expenses. By automating cash handling processes, branches can free up their tellers to focus on customer engagement, thereby improving service quality and operational efficiency. Investing in existing branch teams and empowering them with cash automation technology is the strategic path forward.
For an in depth look at branch cash management, you can download Cash in the Evolving Branch: A Definitive Guide to Cash Recyclers