FOBISS Cash Management solution overview in Russian (на русском)
Intelligent_Business_Operations
1. Intelligent Business
Operations
Best Practices in Cash Supply Chain Management
Executive Summary
The purpose of any supply chain is to meet customer needs and grow business prof-its.
The cash supply chain is no exception. Banks manage their cash point networks
(e.g., ATMs, bank branches, cash centers, retailers) by providing cash withdrawal
services where and when customers need them. To make a profit, banks must man-age
these activities efficiently.
Managing cash supply operations is a complex process that involves independent
stakeholders including banks, cash in transit companies (CITs), and independent
service operators (ISOs). The process also involves decision-makers at strategic, tac-tical,
and operational levels—each performing certain tasks by managing and con-trolling
the operations and processes.
Every decision-maker needs timely, quality information. The main question is how
to quickly provide decision-makers with the right insights to help them make win-ning
decisions.
This white paper explains the best practices in cash supply chain management and
outlines the benefits of the intelligent business operations (IBO) working style.
IBO and Company Performance
IBO is a work style that integrates near-real-
time analytic and decision manage-ment
technologies into the transaction-executing
and bookkeeping operational
activities that run the business.1
According to Gartner, by 2016 around
70 percent of companies reporting
high performance will be implementing
extreme collaboration or real-time pre-dictive
analytics to manage their busi-ness
processes.
IBO tools (Figure 1) can help improve
business processes by providing visibil-ity,
situational awareness, and flexibility
for those who manage cash supply chain
operations and make decisions on a
daily basis.
Why Efficiency Matters
Despite the popularity of credit cards,
cash is still the most common payment
method. Globally, more than half of pay-ments
are made in cash. The increasing
demand for easily accessible cash drives
banks to expand their cash point net-works.
However, as the network grows, it
becomes more difficult to supervise—
and operating costs rise.
Effective cash management is a crucial
success factor for banks and outsourc-ing
companies. It can give banks more
prime retail space in branches and free
up staff to focus on customer-facing ac-tivities.
Other benefits include shorter
cash lead times, better ATM availability,
and lower operating costs.
White Paper
Intel® Xeon® Processor E5 Family
Data Center Efficiency
Financial Services
2. IBO connects internal and external busi-ness
information systems into a common
environment where data is analyzed and
made available in real time for operation
managers and strategic decision-makers.
IBO performs a different function than busi-ness
intelligence (BI) but is complementary.
The goal of BI systems is to gather and ana-lyze
the historical data during a certain pe-riod.
The IBO platform compares historical
data with real-time data, determines trends
and links between actions, and makes pro-jections
for the future.
Another important IBO function is au-tomating
optimal decision-making,
where the forecasted demand, existing
and planned limitations, and results are
used in real-time to automatically
choose the most cost-efficient combina-tion
of cash quantity, denomination, de-livery
time, route, etc.
With IBO, decision-makers have full visi-bility
to rapidly and flexibly respond to
real-time changes through:
• Graphical presentations of information
• Customization of user interface in accor-dance
with the performed functions
• Contingency notifications
• Decision simulation tools
Managers can perform real-time monitor-ing
and evaluations of key performance in-dicators
(KPI), monitor implementation of
strategic goals in the company, and stay
informed on the system suggested tacti-cal
actions.
Artificial Intelligence-Based Analytics
The IBO platform performs the complex
cash demand forecasting and optimiza-tion
tasks using its integrated artificial
intelligence algorithms, capable of real-time
processing of large amounts of in-formation,
evaluation of historical data,
relations between them, trends, and pro-jection.
It chooses the optimum decisions
out of millions of possible combinations—
something the human brain and stan-dard
analytical tools cannot do.
It is important to mention that without
underestimating the human input, the
expert knowledge of staff is especially
important in the process of algorithm
training. The system does not answer
the question “Why?" Instead, it evaluates
causes based on insights entered by ex-pert
staff.
For example, while analyzing the error of
system forecasting, an employee notices
it could have been influenced by an
event that took place in the region. The
Intelligent Business Operations
Contents
Executive Summary . . . . . . . . . . . . . . . .1
Why Efficiency Matters . . . . . . . . . . . . .1
IBO and Company Performance . . . .1
Artificial Intelligence-Based
Analytics . . . . . . . . . . . . . . . . . . . . . . . . . .2
Business Benefits of IBO . . . . . . . . . . .3
Intelligent Cash Management . . . . . . .3
Scalability . . . . . . . . . . . . . . . . . . . . . . . . .4
IBO in Action . . . . . . . . . . . . . . . . . . . . . .4
Recommendations . . . . . . . . . . . . . . . . .4
Figure 1. Intelligent business
operations (IBO) tools
2
3. Intelligent Business Operations
IBO Platform
• Connects and integrates all
kinds of information systems
• Automates processes end-to-
end across systems
• Provides visibility into what
is happening real time
• Supports evidence-based
and timely decision-making
• Delivers efficient manage-ment
and optimization
from having responsibility for the
full cycle vested in a single entity.
Intelligent Cash Management
The FOBISS CM* IBO solution is the first
complete and integrated product for deliv-ering
cash management services within any
type of cash point networks:
• ATMs (cash in/out, recyclers)
• Bank branches,
• Cash centers
• Retailers
Figure 2. Business benefits of
the IBO approach
• It is self-learning
• It assumes
• It adapts
• It predicts
• It finds typical and untypical
behavior of each cash point
• It analyzes and suggests the
most valuable decisions for
the user
algorithm gets this information and re-evaluates
the relations, thus learning to
make even more precise projections.
This work method eliminates the risk of
losing know-how due to staff changes. It
also eliminates the information gap
when, for example, a bank employee fills
in for a colleague from a branch in an-other
region who is on sick leave.
Studies and pilot projects evaluated the
precision of these complex algorithms.
For example, in a network of 6,000 cash
points, in measuring the efficiency of ac-tivities,
revealed that using the IBO plat-form
saves:
• 22 percent in logistics costs
• 17 percent of costs related to
preparation of money
• 55 percent of costs related to interest
In monetary terms, a bank operating a
cash point network of such size saves 11
million Euros (USD 13.6 million) per year.
Risk management takes place simultane-ously
and the quality of client service is
ensured, so profitability grows.
Business Benefits of IBO
IBO benefits financial institutions in a
number of ways (Figure 2). This enables
them to shorten cash lead times, maxi-mize
cash point availability, reduce net-work
operating costs, and maximize
profitability. Additionally, the technology
enables its users to:
• Be aware of network performance
including real-time profitability
• Reduce cash-related operating
costs by up to 40 percent
• Automatically support set KPIs and
service level agreements (SLAs) for
the entire logistical chain
• Ensure minimization of on-balance
sheet cash in the supply chain by
using effective forecasting and
stock management tools
• Use latest-generation IBO technol-ogy
in cash points to streamline
cash transactions
• Ensure the supply chain is
defined, integrated, and managed
as a single entity
• Reduce physical space and
resources devoted to the adminis-tration
and handling of cash
• Examine the potential for the full
cash cycle to be outsourced with
the benefits of full accountability,
ownership, and efficiency that flow
3
4. Intelligent Business Operations
The FOBISS CM* IBO solution can:
• Save significant time and HR and
4
money resources for users of appli-cations
by optimizing decisions and
processes
• Eliminate dormant cash all over the
network and maximize efficiency,
meeting SLAs with minimum
resources
• Provide complete transparency into
processes for significant savings
and evidence-based and timely
decision-making
Scalability
Effective cash management requires the
ability to aggregate and decide upon
large volumes of data from different
sources such as ATMs, bank branches,
or vaults (Figure 3), while organizations
need fast computation and flexible ac-cess
to this data in real-time. Large
numbers of cash storage devices, multi-plied
by provided currencies, decision
spaces, and hourly or daily solution de-mands,
create huge computational
workloads that can be managed by the
parallel processors of modern servers.
Figure 5 documents the results of a test
at a bank with 185 branches, which was
able to decrease its dormant cash level
by 41 percent.
Figure 6 shows the results of testing at a
bank with 1,100 ATMs. Once FOBISS CM
was deployed, the bank started planning
CIT visits more accurately, reducing both
planned and emergency visits by 16
percent and 64 percent, respectively.
Recommendations
The days of limited, unintegrated solutions
with only basic forecasting and optimiza-tion
are over. Users in today’s volatile world
expect high performance and total flexibil-ity
and situation awareness to deal with
day-to-day cash supply chain management.
When choosing a cash supply chain man-agement
solution, it is important to look for
technologies that are highly responsive and
able to increase performance efficiency.
Such technologies should include demand
management tools, optimization engines,
complex event processing tools, role-based
dashboards, decision management tech-nologies,
and performance measurement
analytics. Most importantly, they should be
based on near- or real-time data.
FOBISS worked closely with engineers
from Intel, using the advanced Intel
fasterLab environment to undertake a
number of benchmarks of the FOBISS
CM product to ensure it can scale out to
significant volumes and still provide fast
and flexible results. The collaboration
resulted in improved crucial daily calcu-lation
performance of 6,000 cash points
(CPs) per hour per standard server.2
Adding more standard server nodes to
the calculation cluster and/or dedicating
more hours daily calculations allows
FOBISS to meet the exacting demands
of scale and timeliness present in today’s
and tomorrow’s banking enterprises.
Built on the Microsoft .NET* platform run-ning
on Intel® Xeon® processors, FOBISS
CM delivers effective data analysis and
cash management with the scalability to
manage tens of thousands cash points.
IBO in Action
FOBISS CM is showing strong results for
banks that have tested it.
Figure 4 shows a case study where FO-BISS
CM was tested at a bank with 6,000
ATMs. The tests resulted in total annual
savings of 11.5 million Euros.
Independent
Service Operators
CIT
Companies
Currency
Chests
Central
Bank
Commercial
Banks
Outsourcing Cash
Management
Companies
Figure 3. Effective cash management requires the ability to aggregate
large volumes of data from different sources
5. Intelligent Business Operations
Replenishment Cost (CIT)
Cash Custody
Cash Processing Cost
Cash Interest Rate
5
Total Annual Savings: 11.5 Million Euros
724,098 EUR
Figure 4. Testing the platform in
a bank with 6,000 ATMs showed
total annual savings of 11.5 mil-lion
Euros.
Replenishment Cost (CIT) Cash Custody Cash Processing Cost
Cash Interest Rate Dormant Cash Level Down 24 Percent Cash Replenishment Down 15 Percent
