The New Convergence: ATM, Branch, and Vault Cash Forecasting Lessons from the Banking Busines

Mark Frost, Director of Forecasting & Decision Science, Carreker – Now a Part of CheckFree

Financial Forecasting in a Global Economy
New York City
Marriott Marquis, Times Square
June 24 - 27, 2007

The International Symposium on Forecasting (ISF) is the premier forecasting conference, attracting the world's leading forecasting researchers, practitioners, and students. Through a combination of keynote speaker presentations, academic sessions, workshops, and social programs, the ISF provides many excellent opportunities for networking, learning, and fun.

Economists have long argued cash is just another good. On the retail side certainly, cash to an operations banker is indeed an inventoried good exposed to the same benefit-cost decision values as other consumables. Nevertheless, cash is a special good for its stocks (cash) circulate as the medium of exchange and its warehouses (banks) are financial intermediaries. The unique inter-dynamics of supply (deposits) and demand (withdrawals) create special forecasting challenges that require a creative deployment of expert heuristics that can adapt and react on a utilitarian enterprise value proposition.

This paper explores the econometric nature of retail and wholesale cash banking from a forecasting and inventory management perspective. After a review of best practices, data issues, and the mitigation processes thereof, we will chronicle and explain the various forecasting methodologies and heuristics employed. Lastly, we outline the impact on stakeholder expectations given the globalized market dynamics and recent institutional innovations such as the new cross-shipping penalties by the Federal Reserve Board.

The reader/listener should finish with a keen understanding of the economics of bank cash management, the importance yet limitations of cash forecasting, and an epistemological challenge towards future research towards the answering of current known unknowns.

The 27th Annual International Symposium on Forecasting

Contact: Ann S Cave
email: ascave@checkfree.com
phone: (678) 375-4039