First, let’s all accept that when we consider the thin margins that most CIT companies operate under it is unlikely Building a Better CIT Service will be adopted as a business plan anytime soon. That said, as we continue our uncharted journey examining Obsessive Cash Disorder I am led to wonder – aloud as it turns out – what would be the drivers for and components of – a better CIT service.
I was fortunate enough to recently be asked to give a presentation on the current and future states of cash handling, both domestically (North America) and internationally in markets with which I am familiar. Compiling the presentation was an exercise in combining and distilling common cash handling practices as they are applied in markets that have extremely different compositions and demands. The point of the presentation – and what had been requested by the organizers – was to identify high level options for coping with the future. Notwithstanding the fact that the design and make-up of cash will continue to evolve (for reasons of national promotion/identity and security), there are certain other drivers that will force the evolution of cash handling services.
Cash will continue as a dominate payment mechanism
All customer levels will continue to have variable demands for cash
Central Banks will remove themselves from the daily cash cycle
Economies of scale and enhanced automation are affordable
In response to these changes we have a very fewÂ options. Some are more reaction to the unknown, unexpected or previously marginalized consideration. Some require a more visionary execution through interpretation and acceptance of a new kind of cash product.
Stay The Course
Adapt to Opportunity
Change the Rules
The Facts and Futures contribute to a climate of change… or not. For purposes of our discussion and leave the ostriches, happily believing the world will not harm them, for another time. It is the banks considering Outsource, Adapt to Opportunity and Change the Rules who present the opportunity for theÂ entrepreneurialÂ CIT. The CIT in question will undoubtably need to be focused on Change the Rules as a business strategy.
One thing we know for sure and which became a topic of considerable discussion at the presentation that was the fuel for this article – cash handling is an exception based business. The nature of those exceptions are as varied as snowflakes. The reality is they start with the end-customer and have effects that ripple up the supply chain – often with magnified impact. From what I can tell in my limited experience there is a disconnect between most CIT’s and their banking customers. On the one hand, CIT’s need to assure security, longevity and profitability while competing in an often cut-throat environment. On the other hand, banks need reliable, consistent and secure services for clients that have ever-changing needs and circumstances.
The response from many players in the CIT industry has been to homogenize their products (because ofÂ competitionÂ many will tell you) and force rules on their customers. Rather than make the most of the exception based behaviour of their market, they try and blend, bend and intra-extrapolate metrics in a way that distorts the cost and value of the product at the same time. To hear a Vault manager describe a CIT submission for an RFP is like listening to a play by play on a professional ping pong match with the variety of pricing levels, triggers, thresholds, limits and surcharges that are applied to services that barely fit the request. There is no transparency anymore in the price for service relationship between many CIT’s and their customers. I don’t readily know why this is, which in itself warrants future debate – and it doesn’t matter which party(ies) perpetuate it. In my humble and decidedly biased opinion, there is room for CIT service that is a) constructed to embrace exception; b) is priced transparently and simply (and which won’t be the least expensive bid!); and c) is considerate of all service levels that may be required by it’s customers.There are both software and hardwareÂ solutionsÂ available today “off-the-shelf” that can allow a CIT to operate full service exception based cash services with a scaled investment equal to a (hopefully) growing demand. Previously a very significant investment was required,Â particularlyÂ in currency sorting hardware, to provide evenÂ initialÂ capacity for a hopefully growing business – in the millions of dollars ($US). Software solutions capable of handling the complexities of processing and reporting multiple transactions for multiple bank customers were also not inexpensive. This was simply the environment created from niche software development demand in a high value and previouslyÂ entirelyÂ manual environment. In summary, as the industry has continued to automate and standardize, previously expensive and rigid technologies have become considerably less expensive and much more adaptive, scalable and user-friendly.
Unfortunately many of the larger CIT’s have already made significant investments of capital, process and product positioning to easily adapt to an uncertain and evolving market. A new CIT or one that isÂ smallÂ withÂ aspirationsÂ of growth might have the option to upgrade a simple current deployment or implement a new solution from the ground up. With careful discussion and tireless relationship building a new rising CIT might be able to convince enough customers that exception-based service derived fromÂ obsessiveÂ cash disorder is worth more in an upfront and transparent contract that one based on multiplicity of situations, volumes and other variables.
In some markets I see CIT’s who are able (given regulatory, insurance and labor constraints) that are trying to work with their customers to bend the habitual rules or engagement and work together to ensure those who need cash get it and those who don’t can get rid of it. They are trying to adapt to new technology like smart-safes, recycling devices and on-demand automated cash ordering for ATM’s, Branches and other bank controlled cash repositories. They are trying to adapt to smart track & trace technologies and learning how best those technologies can best serve themselves and their customers. They are stifled by relentless demand, sometimes unreasonable risk and/or cost exposure and in general by a competitive environment that results in sub-standard service, concerned customers and a bleak economic forecast.
Your challenge, Mr. and Ms. Banker – no matter whether you are located in the East or the West, north or south of the Equator, is to seek out, promote and support the CIT partners who best understand and serve your customers needs in equal or greater proportion to yours
Your challenge, Mr. and Ms. CIT Executive is to provide services that are in sync with all levels of the supply chain for a transparent and simple fee that will ensure your customers delight at the value and your long corporate life.
We hope you both accept the challenge ofÂ buildingÂ a better CIT service!