On average, credit union users of the Ceto Cash Calculator, offered through corporates by consultants Ceto and Associates, reduce cash coffers by more than $100,000 per branch.
"As of 2007 year end, our credit union cash management users carry, on average, $225,000 per branch, compared to the industry as a whole, which carries $342,000," said Paula McKeone, strategic alliance manager, "and I really think those numbers confirms the need."
Ceto and Associates is best known for pioneering deposit reclassification, a Federal Reserve-approved, Regulation D loophole that allows financial institutions to keep fewer funds in nonearning reserve accounts. C3 has been on the market for a few years now, but demand has picked up this year due to market and economic challenges, which have forced balance sheet managers to search for new income streams, McKeone said. The product also got a boost from MasterCard's TowerGroup, which recently sourced Ceto and Associates for a cash management white paper that praised the company's "holistic approach to cash management."
Industry research and a very favorable review from a product review panel convinced Georgia Central to offer the service to its member credit unions.
"Many on our panel said 'Yes, we're doing this ourselves in an Excel spreadsheet we created, but it's a little like putting your finger to wind and estimating,'" said Vice President and Chief Technology Officer Dawn Sirras.
Sirras said her team preferred C3's user-friendly interface, which allows an institution to create a program that specifically meets the needs of each branch.
"It allows you to be as detailed as you want to be," Sirras said. "For example, you can enter volumes in whole dollars or in denominations."
C3 can also handle cash management for on-site or stand alone ATMs.
Cash requirements are determined based on the institution's own usage patterns, a minimum three-month history that includes vault balancing totals, cash orders, ATM usage and denomination usage. The software then recommends how much cash to keep on-hand and also advises users regarding frequency and denominational breakdowns for future cash orders.
"Margins are tighter, and everyone is looking for new revenue streams, and it's a great opportunity to take funds that are just sitting there and put them to work for the credit union," Sirras said.
"And, you can do it without taking on any risk, because you're building your baseline from your own historical data. You shouldn't ever be in a position to run out of cash at a branch, and you can meet your regulatory requirements and make money on cash."