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Historically, Benchmarking has been the subject of much discussion in the industry, but little real progress has been made. As long ago as the ICCOS Conference in New York in May 2003, the topic of Benchmarking and Performance monitoring was discussed during a breakout session.

Attending delegates were made up predominately of North American cash processing bankers and cash in transit management. Others attended to gain an insight into the subject. The time allocated appeared to be insufficient to cover all aspects of this topic, bearing in mind the willingness of participants to fully explore the concept of improving productivity and efficiency.

The delegates were to share their experience in this area and discuss methods employed to monitor performance, and compare their organization’s performance against other cash processors (Benchmarking). For Benchmarking to become effective, organisations need to effectively monitor specific production areas, based on a common platform. Discussions focused on the performance measures that were adopted, the problems encountered, and the benefits gained. Some of the issues raised at that time:

Performance/Production Monitoring

• Performance was measured for both Production and Efficiency.
• Production covered the speed of processing and the movement of cash through the centre from the point of receipt to cash out/or to the vault.
• Efficiency covered the effectiveness of the process and the cost of processing.
• Many areas of production were measured, or had the capability to be measured.

Problems with Monitoring

Differing types of customer deposit and the difference in size of deposits made comparison difficult.

The differing methods of processing-

• High Speed Automated.
• Automated with some medium speed cash sorters.
• Teller workstation processing with subsequent machine sort.
• Teller processing with limited software and hardware support.

The differing deposits and equipment restricted objective measurement, and it was clear from the discussions that there were varying levels of subjectivity being applied to these measurements. As many of these measurements required manual input, the cost associated with the input time was a factor impacting on the level of monitoring employed.

Benefits of Monitoring

• Production monitoring was assisting in establishing the cost of production. This provides a base on which to set a pricing structure.
• Monitoring the production enabled Cash Processing Management to use the measurements to manage the process and better manage their staff.
• That in turn leads to reviews and restructuring of inefficient processes.
• Measuring the presentation of customer deposits provides specific data to assist in the re-negotiation of charges, where appropriate.
• Monitoring can provide data to reward good staff performance and identify the need to retrain under performers.
• It also results in a more accurate measure of existing and future capacity and provides data to assess any future technology investment.

Examples of measures utilised:

• Speed/efficiency of movement of deposits around the processing centre.
• Time from allocation of deposit to reconciliation.
• Number of deposits per hour processed by each teller.
• Number of customer errors, and time taken to resolve them.
• Quality of deposit presentation. Quality of teller work.
• Presentation of deposit, compared with original agreed/charged method of presentation.
• Number of counterfeits identified at centre, and how many were tracked back to the customer.
• Throughput of notes through the sorters (measured as notes per hour.)

Benchmarking

At that time the subject was quite often referred to, but rarely implemented in a cash processing organisation. The requirement for Benchmarking is particularly important,

where organisations have invested in new technology and wish to measure their progress during implementation, against more established users. In the break-out session discussions revolved around the difficulty in establishing ‘Common Benchmarks’ against which any cash processor can accurately measure the performance of a specific action or operation within a centre.

There are very few benchmarks that exist in the industry due to the diversity of-

• Equipment. (Hardware & Software)
• Processes
• Types of deposit
• Size of deposits

Some processors used specific production standards and compared performance across cash processing centres, within their group. Others had established measures for certain types of deposit within their centre, and were able to monitor staff performance from week to week etc.

Measurements were sometimes based on groups of staff performing activities. It was considered that this method reduced the imbalance caused by individuals processing varying types of deposit. However, this did not identify the strong and weak members within the group.

Depending on the type of measurement, some standards were achieved by objective monitoring, but others measures had a degree of subjectivity. Subjective measurement relies on the knowledge and consistency of the person making the judgment. Very subjective measures were used by one organization to motivate and reward staff for outstanding performance or actions, when undertaking their duties.

Summary

Each organization appeared to adopt their own methods of monitoring production and performance. Some admitted that the tools were in place but not being used. Objective and subjective methods were applied.

There was some confusion as to whether monitoring was applied to measure productivity and performance, or as a means to establish a unit cost on which to base a pricing strategy. It may be considered that effective monitoring of all production elements can result in an accurate cost structure. This structure can then be used to:

• Constantly improve productivity
• Constantly improve efficiency
• Drive down costs from which a pricing structure can be formulated.
• Provide the management tools to consider expansion, investment, or even outsource work that is not consistent with corporate strategy.

There was still some way to go before consistent accurate monitoring could result in benchmarking being applied on a countrywide or global basis. It is clear that whilst players in the cash processing environment would like benchmarks to improve their own processes, they had not moved forward by addressing the basic problems of consistent monitoring on a common platform. Defining those platforms was no closer to completion.

It would seem that Intelligent Currency Solution is the first organization that can drive the potential of Benchmarking in a processing environment. Their independent technology offers the Cash Processing Organisations and Cash in Transit companies, the possibility to benchmark their performance. Although the technology is still very new, it already offers promising opportunities for the industry.

About the author

Alan Gerard has over 30 years experience in Retail Banking in the U.K and achieved a senior management position with HSBC. During his time with this bank he gained experience in Branch and Regional banking with specific responsibility for operational areas. Alan was part of a team that brought high speed automation to cheque processing in the U.K. Following this, he was asked to review and re-structure the HSBC UK cash operation. Resulting from this, cash centers were consolidated and new Hardware and Software introduced to automate a process that had been primarily a manual operation. Alan joined Currency Systems International (CSI) in 1994 and advised them on processing solutions for the banking industry. This significant development resulted in high productivity cash processing solutions being introduced worldwide.

Alan invented Automated Commercial Deposit Processing (ACDP). Alan was appointed as Director of Marketing for CSI and continued to work in promoting automated solutions to the Cash Industry. Alan played a significant role in the recent study commissioned by APACS (in the UK) to report of note quality in the Commercial sector, a review of the Bank of England's specification for ‘Soiled/Unfit notes and the existing submission of unfit notes to the Central Bank.