These are challenging times for retail banking operations. The entire financial services industry is undergoing drastic changes - increased regulation, the development of new services, a serious push to open up competition and the rapid adoption of digital channels have come together to create a period of unprecedented change.

However, one of the biggest challenges facing the industry is changing customer expectations. Financial institutions are finding themselves subject to the same expectations customers have when interacting with digital giants like Amazon and Apple. They want a fast, simple, and easy user experience; and if retail banks can’t evolve to provide what customers have come to expect, they will rapidly be left behind.

Such change within the industry is also creating opportunities to redefine business processes and enhance end user experiences in our high street branches. Executing effective in-branch journeys for both customers and staff is critical to achieving a compelling overall customer experience - but cash journeys shouldn’t be ignored as a key part of the overall strategy. Implementing process efficiencies which reduce operational costs can also be additive to the overall user experience and create the basis for a sustainable branch network for the future.  

So how can financial institutions take full advantage of the opportunity that is open to them?

We all know that transformation of high street branches is underway, albeit with varying degrees of urgency, and this is set to continue for the foreseeable future. Effective branch transformation strategies require a customer centric design, enabled through intuitive technology which delivers a more seamless service - empowering customers to do their everyday banking quickly, conveniently and confidently.

Recognising cash as an area where significant costs savings can be achieved (over 20% in many cases), financial institutions are only now starting to see cash as the hidden link between true operational effectiveness and service improvement.

Despite the growth in alternative payment methods, cash remains important for almost all UK consumers. It accounts for about half of all payments and will remain an important payment instrument for many years to come.  According the to Link Consumer Council Annual Report 2016, the number of cash withdrawals in 2015 rose to 2.064 billion, up from 2.047 billion in 2014. The average transaction value also reached an all-time high (£69).

For many years the cost of cash has been driven by the need for manual intervention, whether that is through CIT visits or the movement of cash around the branch, the need to count, check and recount cash is omnipresent. 

However, with cash recycling now a reality, banks can for the first time, pursue a strategy where no member of staff has to touch cash at all - enabling them to totally reengineer the cash journey within a branch environment.  As well as significantly reducing the operating cost of the branch, the benefits this brings to customer service (and a positive NPS score) is also significant - customers experience fewer queues and are no longer inconvenienced by such things as cash outages at self-service devices.

Whilst the benefits of cash recycling are clear, it is only just beginning to hit mainstream in the UK.  This creates a further challenge for banks as the pressure is on to implement significant strategic changes now, rather than risk being left behind by competitors. Indeed, a recent Retail Banking report stated “There is a short timeframe of three to five years within which new technology, changing customer behavior and fierce competition can be expected to hit the mainstream and change banking operations forever.”  With such a small window for transformation it is imperative that banks act now in order to drive the level of change that will secure the role of the branch for years to come.

It is clear cash is here to stay, but banks need to improve their processes for dealing with it. Cash management is inextricably linked to the wider process of branch transformation, but financial institutions need to take a holistic approach which considers staff, customer and cash journeys together.