Cash management optimization

Primary task of a Cash Optimization System is to offer forecast-based assistance in making optimal decisions about the time and amount of supplies and retrievals so as to maximize the network availability and simultaneously reduce the value of non-working cash and transport costs. Our company is a vendor of the business engine behind such systems.

This engine comprises the following modules:

The Interface Module arranges a chronological turnover estimate model based on historical data. In the case of ATMs, such models are set up for single-day timescales, whereas for branches they are established for multiple timescales (withdrawal turnover for both at and below reporting limit, deposit turnover, foreign currency turnovers).

With the use of interfacing parameters, the Forecasting Module generates medium-term prognoses concerning various ATM/branch cash turnovers over the next few days. Turnover forecasts for newly installed ATMs are assisted by a segmentation built upon existing units. In addition to daily turnovers, the forecasts also predict expected error and confidence rates as well.

The Calculation Module computes, based on forecasts and their expected error rates, the depletion probability rates of ATMs, as well as required cash reserves for both branches and ATMs.

The Optimisation Module generates, subject to the cost function of cash supply and based on forecasted demand figures, a cost-optimised cash supply plan for the medium-term (a period of two weeks), which includes suggested withdrawal, deposit and refill dates, as well as denominations to be delivered.

Recommended ATM refill levels are distributed, based on the forecasted demand for days covered by a refill period, by the Denomination Module into the appropriate banknote cassettes of ATMs.

The Controlling Module is in charge of monitoring the bank’s cash management while also calculating KPIs for gauging the efficiency of the cash supply process and the optimisation system.

Recommendations generated by a system that is based upon forecasting of cash demands can provide direct support to branch cashiers and to the institution’s central cash management, thereby ensuring optimal amounts of cash are delivered at the exact right time.

Such optimisation requires a service-based cost model between the bank and the enterprise in charge of cash transportation.

For the bank, the optimisation system represents an investment with a quick return. As a result of the following likely benefits, it can yield significant savings as far as the costs of cash supply are concerned:

  •  lower amounts of cash being held available in the network
  •  fewer customer visits to ATMs and branches

All this without increasing the risks associated with cash depletion.

Additional benefits of a cash management optimisation system:

 Transparency: all steps throughout the decision making process are documented and therefore kept available for analytical purposes.

lower operational risk: system deployment automates and makes the entire cash management process uniform, from planning to communication with transporters.

Predictability: the system supports long-term planning and the depository or bank-level aggregation of cash demands.

Performance assessment: the system utilises several different performance indicators (KPIs) by which the efficiency of cash supply (cost efficiency indicator, turnover rate, downtimes, number of transactions etc.) can be monitored and assessed.

System functions

  • Forecasting
  • Optimisation
  • ATM and branch visit planning
  • Order management
  • Cash management controlling
  • Supply, turnover and efficiency reports
  • System maintenance and documentation

Auxiliary functions:

  • Long-term planning module
  • Branch evaluation module
  • Forecast correction module



Antal Kerekes

Antal Kerekes

Partner, PwC Hungary

Gábor Oltyán

Gábor Oltyán

Senior Manager, PwC Hungary

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