Currency Management: Interest rates are dropping – now what?

Raleigh-Durham, NC, USA, March, 2002: Mr. Greenspan has dropped the US overnight interest rate TWELVE times since Jan 1, 2001, which equates to nearly a 70% decrease. Does that make proper Retail Banking Currency Management less significant or urgent?

Well, yes, for the uninitiated and less experienced "currency management experts" who still believe that Currency Management is merely managing cash holdings, it certainly seems like two-thirds of the incentive to reduce cash holdings have vanished… But for the many Financial Institutions running Transoft's OptiCa$h, savings still abound. Because OptiCa$h balances all cash cost components against each other, savings do not drop, they just switch around – and in fact, overall they may go up!

For traditional cash managers attempting simple cash holding reductions with manual procedures or with simplistic automated spreadsheets that do not provide true dynamic cost optimization, the majority of the potential savings does not register. For the rest (the OptiCa$h users on six continents), cash holdings savings represents perhaps only 25 % of the overall equation for total cost savings. Thus, the lower the interest rate, the higher the incentive to run a sophisticated Currency Management operation doing what only OptiCa$h does: balancing all costs and automating decisions and ordering.

When interest rates drop like this, it may make more sense to hold onto more cash and drop transportation costs. Deciding when this is the case, and deciding when it is time to take action, is the art of the many OptiCa$h algorithms. This threshold, i.e. when to perhaps drop a scheduled delivery day and send out more cash, is not easily measured, and can only be a moving target based on possible delivery days, anticipated customer demand, transportation cost, etc. ALL the cost optimization parameters MUST be considered in one single balancing act – it is mathematically impossible to first optimize holdings, and THEN optimize transportation. There is only one optimum point on this curve!!!

Furthermore, this is a dynamic process, moving up and down each week with each event, season and other fluctuations. This means a threshold may be reached during the week of Mother's day, but not the surrounding weeks? Does your system continuously optimize this, or are you still doing "just forecasting"?

OptiCa$h brings a new level of TRUE cost optimization with fully integrated forecasting and recommendations, ordering, monitoring and emergency management to your ATM, branch and vault network. The maturity and power of OptiCa$h finds savings everywhere, and continues to squeeze them out of the network while improving availability, and constantly producing unmatched savings. So, when Mr. Greenspan adjusts the interest rate up or down, you can rest assured that you are running a mathematically lean and mean network operation, with the lowest possible overall cost and the highest possible availability. You can also rely on automatic adaptation to reflect any other changes such as carrier prices going up, or the competition setting up shop next to your cash points. That means your bank's bottom line will continue to be that much more attractive than your competitor's!

About Transoft:
Transoft is the world's leading provider of currency supply chain management analytical applications for the commercial banking industry. Based in Cary, North Carolina, Transoft, founded in 1992, develops software that provides large recurring cost savings in the ATM, branch and vault networks of banks, by applying Operations Research and statistical analysis to the cash inventory management and balancing of all cost components.
The company's products include OptiCa$h©, the industry's leading integrated set of analytical applications for predicting currency demand at each cash point, while optimizing cash deliveries and clearings; and eATM©, the next level of NDC/912 ATM software that is hardware independent, thus offering the capability to operate and manage and entire ATM network with one software application.
The components of the OptiCa$h© suite are: OptiCa$h©, the leading optimization and end-to-end processing tool for Currency Management, OptiNet©, an integrated web-enabled branch and carrier communications tool that extends the functionality of OptiCa$h© to intranets; and OptiVault©, a vault consolidation analytical application that optimizes currency and coin ordering, denomination management and clearing methods for bank money rooms and carrier vaults.

Transoft is a privately held company with more than 40 customers in production across 6 continents, managing cash for over 40,000 ATM's and 14,500 bank branches. Transoft can be reached at 919.678.9192 and www.transoftinc.com.
A full-text copy may be downloaded from the web; access http://www.transoftinc.com and click on News & Events.

Contact:

     Transoft International, Inc.
     Roger L. Baldridge, 919.678.9192
     Director, Marketing and Business Development
     Roger.Baldridge@Transoftinc.com





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