Branch Automation/Retail Banking and Cash...

REVIEW SEMINAR 2014 COLOMBO

TAN CHEE MENG

Branch Automation/Retail Banking

and Cash Recycling Trends

Branch Automation/Retail Banking and Cash Recycling Trends

Branch Automation

Bank Branch Density

TAU (Teller Assist Units) Density

ATMs

Recycling/Recirculation

Case Studies: A Big US Bank, Scotiabank

Source: RBR

172

174

176

178

180

182

184

186

640,000

660,000

680,000

700,000

720,000

740,000

760,000

2003 2004 2005 2006 2007 2008 2009 2010

Branches (left axis) Branches per Million Inhabitants (right axis) 743,000

Current recessionary economic environment may lead to branch rationalisation

Number and Density of Bank Branches Worldwide (C25)

Branch Density

South Africa: 61 branches / mill. pop.

Spain: 934 branches / mill. pop.

743,000 branches (C25) 2.3 million tellers (C25)

Source: “Global Teller Assist Units 2011” by RBR

USA: 319 branches / mill. pop.

Branch Density end 2010

Branch Automation

What are these? ATM, CDM, Deposit accepting ATM,

Recycling ATM VTM iTM TAU- TCD, TCR Universal Teller

New Branch Solution - China

Nautilus Hyosung Confidential 6

Teller-less branch with full function ATM including video banking

Smart Branch’ - Korea

Woori “Twenties Woori” Shinhan “S20”

Hana “Smart Zone” Busan “Smart Square”


ATM with debit card issuing function

New Branch Solution - US


Self-service ATM with coin dispenser to eliminate ordinary teller work

Traditional Branch Open-Plan Branch

Routine transactions

Security barriers

Cost centre

Advisory services and sales

No security barriers

Commercial profit centre

Source: RBR

Branch Transformation

Branch Transformation

General trends in retail banking:

More convenience and better service across channels

Number of branches growing

Characteristics of the branch and role of the teller evolving

Cash in circulation increasing

Cash handling costs (including security) significant and increasing

Source: RBR

TAUs

Drivers for TAUs: Improved Security- a safe with time delay lock Efficiency Gain- faster transaction, less waiting time Accuracy- counting & authentication ROI- cost saving, customer focus & product sales Resource rationalization- free up tellers Regulation- on security of employees & cash

Mexico: 2 TAUs / 100 branches

Spain: 99 TAUs / 100 branches

164,000 TAUs (C25) 1.6 million ATMs (C25)


USA: 38 TAUs / 100 branches

TAUs

0

50,000

100,000

150,000

200,000

250,000

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Recyclers

Dispensers/Acceptors

Dispensers

164k

TAU Installed Base Worldwide (C25)

217k

112k


TAUs

TAU installed base 2003-15 (C25) TAU shipments 2011-15 (C25)

0

50,000

100,000

150,000

200,000

250,000

2003 2005 2007 2009 2011 2013 2015

Dispensers Dispensers/Acceptors Recyclers

53%

19%

28% New Installations

Replacements:Migration to Recyclers

Replacements: Like forLike

118k

80%

19% 1%

Recyclers

Dispensers

Dispensers/Acceptors

118k

49% 73%

14%


TAUs- Dispensers vs Recyclers

ATMs The future of ATMs is good:

Ubiquity- 2.8 million units at public locations Ease of use- trusted and well-known Universal- can access anywhere in the world Lower overall costs- ATM is cheaper than teller

even in China

ATM growth- snapshot

ATMs Globally, 2012 Asia Pac accounts for 41% of world’s 2.6 million ATMs and grew by 13%


Source: RBR


Asia-Pacific


Source: RBR

Cash Recycling Trends

Local Cash Recycling Self-service- Recycling ATMs Teller- TCR Retailer- POS solutions

Local Recycling Trends

Dynamics of Recycling: Increasing cash demand – average 6% a year Central banks delegating to the commercial

sector Need to cut cost– transport (collect & refill) &

sorting, space

Technological advancement – affordable detectors (fitness, authentication & OCR)

Corporate Clients

New notes

New & Fit notes Commercial

Banks CIT

Unfit & Excess notes Include unprocessed

CIT

• Transport

• Store • Transport

Collect

11 BNM Centres

BNM HQ

Before 1997

ATM &

CDM

P U B L I C

Corporate Clients

New notes

New & Fit notes

Commercial Banks

CIT

Unfit & Excess notes Include unprocessed

CIT

• Transport • Store

• Process • Store • Transport

Collect

Recycle

6 BNM centres

BNM HQ

After

ATM &

CDM

P U B L I C

Collect

Behavior of the Costs with Recycling

Holding costs

Moving costs

Total costs before

Total costs

Cos

ts

Average shipment size

©2012 Secura Monde International Ltd

28

Example: 30% of cash is recycled locally

Max annual cost of a viable recycling solution

Recycling Trends

Two Types of Recycling: Direct or Within-Device Recycling Indirect or Manual Loading on site

Recycling

Recycling Trends

Local Recycling Trends

CONCLUSIONS • Decreasing equipment prices leading to more

convincing business case • More Central Banks are moving to delegated

model - we expect supportive legislation to promote recycling

• There is likely to be an increasing regulatory requirement at least to authenticate recycled cash - but unclear how it can be enforced

Case Studies

A Big Bank (USA)

Scotiabank (Canada)

Case Study- Big US Bank

Source: ICCOS Asia 2013

Case Study- Big Us Bank

Source: ICCOS Asia 2013

Case Study-Scotiabank

Source: ScotiaBank

THANK YOU

World Trends and Lessons

Learned from Global Conferences

Branch Automation/Retail Banking and Cash...

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