Smart Cash Management, a new Siemens forecasting tool, based on advanced neural networks, has solved the difficulty of forecasting exactly how much cash needs to be kept in an auto teller machine.
Making for accurate and timely cash loading of cash machines, Smart Cash Management minimises the resources spent on transport and insurance, and reduces the amount of tied up capital. Various European studies commissioned by a number of banks have shown that annual profits of over 5 billion Euros could be gained if these banks employed this released capital. In comparative tests run by a number of banks, the forecasting tool developed by Siemens turned out the best rating.
In the German tests, depending on where it is located, a cash machine holds up to 400 000 Euros, an amount that is usually not entirely withdrawn by the user. The developers at Siemens Corporate Technology have developed a method that enables an accurate forecast of how much money is required in a cash machine.
Compared to the amount of money normally stored in the machine, there is a difference of between 20 000 and 40 000 Euros, which is money that the machine never dispenses. While this may seem a low amount, for banks it is closely related to the cost of insurance and lost interest. A bank operating 1500 cash dispensers will keep something like 30 to 60 million Euros in their machines which does not earn interest. If the bank were to invest this amount at an interest rate of only 5%, the additional net interest gained each year would be 1,5 to 3 million Euros. Any savings made on insurance and transport costs could be added on top of that.
The German Bank Association states that there are 50 487 cash dispensers installed throughout Germany. If each dispenser contained only 20 000 Euros less, then this would sum up to over one billion Euros. Based on an annual interest rate of 5%, the banks in Germany would make a total profit of approximately 50 million Euros.
Dr Hans-Georg Zimmermann, of Siemens Corporate Technology, says that while there should always be enough cash in the cash dispenser for serving all customers, there should not be more than that amount, adding that banks from all over Europe are currently testing the available forecasting tools, applying their own specific requirements in each case.
"Some assume a fixed amount of money in the dispenser and wish to determine the point in time at which to reload cash. Others refill their dispensers at regular intervals," explains Dr Zimmermann. "They may call on their dispensers every nine days and then vary the amount of cash by day of the week and season. Our system not only reduces the cost of operating cash dispensers, but also enhances customer satisfaction because failures due to lack of cash can be nearly excluded."
The fact that Siemens has come out best in all comparative studies undertaken by German banks, Dr Zimmermann continues, is directly linked to the experience gained within the Corporate Technology team in its work with neural networks and the forecast of dynamic systems.
"For our cash management system we are using our simulation and development environment for neural networks (SENN), which we have been using for a long time to conduct complex data analyses in many other economic and industrial fields," he says. "All customers have one common requirement - they demand a spot-on forecast."
For more information contact Siemens Southern Africa, 011 652 2000.
© Technews Publishing (Pty) Ltd. | All Rights Reserved.
printer friendly version