The Multibank Cash Services Management Model

As cash continues to survive attacks from different fronts, the search for efficiency is a major topic in cash logistics. On the banking front, increasing costs, decreasing revenues and profitability, and technological developments force banks to make changes in their way of doing business to stay competitive in the market. Collaboration of banks is a strong option for minimizing the cost of cash. A viable and proven option for commercial banks is to form joint ventures to optimize their cash logistics operations.
In this unique interbank cooperation model which was developed under a consultancy project, we propose a special joint subsidiary for a group of banks that will manage the cash logistics of members in such a way as to minimize the costs and increase service quality for all. The scenario involves multiple banks, multiple cash handers operating in multiple regions in a certain country. Idle cash for banks is a primary concern due to high inflation and overnight rates, and therefore banks want to join their cash stocks and borrow from one another, minimizing idle cash and eliminating costly and tardy Central Bank deposit / withdrawal operations. This joint, yet independent subsidiary manages cash stocks of each banks in such a way that a surplus of a member bank is used to cover the deficit of another. The cash stocks are physically kept and moved by cash handlers; handlers however act in line with orders from this joint subsidiary in an online fashion via sophisticated software. In closing the day, there is automated clearing & settlement, as well as a planning for sufficient cash stocks to support next day’s operations.