Following along from CashSSP, we have to wonder if there are any active models anywhere else in the world that are managing cash for less. As circumstanceÂ dictates, Australia is a perfect geographic and infrastructure target for a national cooperative – of sorts. Cash Services Australia (CSA) was born from the desire by some of the commercial banks in Australia to support anÂ independentÂ initiativeÂ to enhance cash services and reduce individual cash management and transportation costs. Cash Services AustraliaÂ hasÂ adaptedÂ the concept of managing cash for less and applied it to a commercial bank market. The offering consists of various products which in effect allow a Bank to outsource their entire cash supplyÂ chainÂ management, including regulatory conformity and central bank deposits and orders. In theÂ AustralianÂ market today large nationalÂ financialÂ institutionsÂ have outsourced their cash supply chain management and are reaping the benefits of managing cash for less. In CSA’s words:
Synergy through aggregation
The multiparty scale of CSAâ€™s client and provider profiles delivers vast efficiencies across the people, process and technology dimensions of your business.
Our aggregated model provides for superior logistics planning and combined network management.
A combination of CSAâ€™s multiparty visibility and solutions allows us to optimise currency networks and ensure reliability of supply to our clients.
CSAâ€™s rich data pool, proven methodologies and customised technology solutions unlock real value in your currency cycle.
CSA supports a competitive and vibrant Cash-In-Transit (CIT) industry.
Competitive forces also stimulate innovation. We are committed to working with our providers and clients to promote innovation and continuous improvement across the industry.
Recent research into the effectiveness of a nationalized program capable of managing cash for less, led one executive research firm to interview David Pegley, CEO of Cash Services Australia about the Australian market and the drivers that allow CSA to exist and thrive. Booz & Company is a leading global management consulting firm focused on serving and shaping the senior agenda of the worldâ€™s leading institutions.Â The complete Booz & Company interview document is presented more as a paper on the concept of managing cash for less on a national scale, than it is a confirmation of CSA’s effectiveness. Nonetheless it is a glowing acknowledgment of the industry and application of services that confirm CSA understands their business very well. A small excerpt from the Booz & Co. interview (the Executive Summary) follow. At the bottom of the article you will find a link to the full Booz & Co. interview document on the Cash Services Australia website.
Banks currently pay 80 percent of the bill to provide cash. In Europe, for example, this is worth about â‚¬84 billion annually. With rising fuel prices, traffic congestion, and increasing safety standards, this cost is forecast to increase. In addition, cashless payment is a fast-growing trend, which in some countries, such as the Netherlands, is already forcing up the cost per transaction.Â
In response, there are three waves of cost reduction that banks around the world are taking to reduce their cash costs.
The first wave is optimization of internal bank operations. Through more sophisticated cash planning, intelligent monitoring of ATM incidents, and rationalization of the ATM footprint, banks can cut their total cost of managing cash byÂ as much as 10 to 15 percent.
The second wave is outsourcing. Transferring cash operations to third-party providers can lower costs, as outsourced providers typically achieve greater economies of scale. Contracts of this nature often give banks savings in the range of 15 to 20 percent, along with higher or equivalent service levels. However, outsourcing can lead to market consolidation and resulting price escalation and single-point-of-failure risk.
The third wave of cost reduction is the establishment of multibank cash utilities. By collaborating on cash processing, distribution, and machine management, banks can cut costs, manage outsourcing risks, and gain greater buying power with third-party providers. This approach has proved highly successful in Australia, Austria, and Finland, with reductions of 20 to 30 percent in the cost of cash operations.
Read the full interview document Managing Cash For Less Improving the Efficiency of Banks’ Cash Operations, on the Cash Services Australia website here.
We acknowledge the permissions of the Authors from Booz & Company as well as that of Mr. David Pegley and the Executive Management of CSA in allowing us to use and link to their paper. Following is a little about Booz & Company:
Booz & Company is a leading global management consulting firm focused on serving and shaping the senior agenda of the worldâ€™s leading institutions. We are a firm of practical strategists known for our functional expertise, industry foresight, and â€œsleeves rolled upâ€ approach to working with our clients.
We have been involved in some of the most celebrated business episodes of their day, including the dawn of the contract system for Hollywood movies, the merger of the National and American football leagues, and the rescue of the Chrysler corporation from bankruptcy.
Booz & Company has always been known for foresight and impact. We are known for our deep industry and functional expertise across public and private sectors, our influential global studies and books, and our management magazine,Â strategy+business. We developed the concept of human capital in the 1940s, product life cycle in the 1950s, supply chain management in the 1980s, smart customization in the 1990s, and organizational DNA in the current decade.