Tactics for approaching cash optimisation in bank branches. (2016)

• Record Type: Journal Article
• Authors: Zaragoza, Miguel Aguilar; Mota, Idalia Flores De La
• Is Part Of: International journal of simulation and process modelling. Volume 11:Number 6(2016)
• Page Start: 492
• Page End: 503
• Publication Date: 2016
• Subjects: dynamic programming -- compound processes -- generalised linear models -- GLMs -- integrated nested Laplace approximation -- INLA -- cash optimisation -- bank branches -- banking industry -- modelling -- cash transactions -- vault policy; Management -- Computer simulation -- Periodicals; Mathematical models -- Periodicals; Operations research -- Periodicals; Simulation methods -- Periodicals; 003.05
• Languages: English
• ISSNs: 1740-2123

Abstract

Banks, through their branches, offer cash transactions as a key service, so any lack of available cash is a critical issue, since it affects the prestige of the entire bank not just of that branch in particular. This paper aims to establish a vault policy, that lets the staff know how to manage the branch's money efficiently, by handling orders to the central vaults with realistic assumptions and easy-to-implement criteria. We present a model based on dynamic programming principles, to represent the problem and generate an input for the vault policy. Other inputs for the policy are some parameters set according to a branch's demand for a cash transactions approach, from the perspective that the best fit is between frequentist and Bayesian. With these inputs and a definition of some 'intuitive' rules we can implement and assess the vault policy. The results for 30 branches are presented.