TRENDS IN CURRENCY PROCESSINGBest Practices for Using Technology to Improve Your Cash Logistics

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U.S. Treasury Department’s Bureau of Engraving and Printing• There are 35 million bills of all denominations produced each day, • Rough value of daily bills produced is around $1.5 billion• It costs approximately 8.7 cents for each bill• 0.1% of all money in circulation is fake or around $780 million• 90% of all bills are printed to replace destroyed or withdrawn

HISTORY OF CURRENCY

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Several benefits of using currency include:• Easy medium of exchange• Tangible and easy to validate its worth – store of value• Retains anonymity of the consumer• Allows customers privacy of personal accounts

CHARACTERISTICS OF CURRENCY

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CASH IS PROBABLY NOT THE FUTURE…

• 98% consumer adoption

• Phone vs. wallet

• Bitcoin-- $1.3B in 2012 transactions1

1Source: bitcoin.org

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BUT, IT’S NOT GOING AWAY SOON…

Source: Federal Reserve Bank of San Francisco, 2012 Annual Report

Currency in Circulation

6Source: Federal Reserve Bank of Boston 2011 Survey of Consumer Payment ChoiceOliver Wyman analysis

21% 28%Cash is used more often…

$69 $75 …carried around in larger amounts…

$179 $220 …and spent faster!

Monthly cash transactions

Median cash holdings

Median monthly cash withdrawal

2008 2011

TRENDS IN CURRENCY USE

7 Source: 2010 Survey of Consumer Payment Choice

NUMBER OF PAYMENTS BY INSTRUMENT

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Technology has made retail receivables more sophisticated

…yet retailers’ cash handling has remained mostly unchanged

Prepaid Cards

Prepaid Cards

Back Office Conversion

Cash

Physical handling costsMinimal integrationSignificant idle cash

Debit and Credit Card

Growth

Self Check Out

Check Imaging

Prepaid

Emerging Mobile

Payments

RETAIL TRENDS

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Ledgers by hand

Drive Thru

ATM

INNOVATION IN CURRENCY LOGISTICS

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GUNS AND WHEELS

INNOVATION?

11 Ó Fifth Third Bank | All Rights Reserved

THE REMOTE CASH CAPTURE VISIONFifth Third’s Commitment to Currency Logistics

2007 2009 2011 2012 2013 2014

Fifth Third’s Innovation...Fifth Third becomes pioneer & market leader for providing provisional credit in the Smart Safe industry

Fifth Third’s Vision...Fifth Third expands its view & commitment to the market through it’s CPS strategy & managed services model

Fifth Third’s Dedication…Fifth Third invests in a team of industry experts & changes the course of the market

Fifth Third develops a strong partnership with Brinks & begins to change the dynamics of the Smart Safe industry

Market adoption grows & Fifth Third expands business model with Garda & Loomis. Fifth Third captures 70% of the provisional credit market

Fifth Third introduces the CPS10K, CPS2K & CPS1K to address new market segments through a managed services model

Fifth Third introduces a device management strategy will revolutionize the availability of data & how the network is managed

Fifth Third develops a strategy to expand the market & address key service limitations through a managed service model

RCM CPS

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Closed Loop Cash Management

Remote Cash Capture provides daily access to cash, improves liquidity, eases reconciliation, and reduces operating expenses, while cash receipts physically reside in the safeCashiers collect payments throughout the course of their shift.

Mitigate risk of fraud and theft by securing cash at the earliest opportunity.

Cash receipts are deposited into an on-site smart safe.

Deposit data is recorded and aggregated for transmission to Fifth Third Bank daily for posting to a clients account.

Monitor cash flow activity, including deposit and change order detail by location utilizing a BAI file and Web-based reporting.

The safe contents are picked up by a courier on a prearranged schedule and transported to a secure cash processing facility.

Operations

Treasury

Loss Prevention

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Focus Staff on Core Business Activities that Improve Sales• Increase floor presence of management

• Increase throughput and sales per man hour

Utilize Cash Handling Technology• Reduce non-service administrative labor

• Minimize cash handling redundancy

• Optimize device placement

• Create a closed loop

BEST PRACTICES

“If more focus was around readiness of store inventory and having the available supply for customer demand, an increase in sales would result.”1

“Store labor is the 2nd largest expense for retailers, often accounting for 10-20% of sales and sometimes for more than 50% of operating costs – labor planning, execution, and retail store performance.”2

1 Source: http://www.oracle.com/us/industries/retail/redesign-customer-experience-wp-177586.pdf2 Source: http://faculty.chicagobooth.edu/workshops/omscience/archive/pdf/Traffic-Product.pdf

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Improve Safety and Security

• Eliminate Bank Runs

• Reduce Armored Frequency and gain Provisional Credit

• Reduce Till Balance & Deposit Exposure

Reallocate or Extract Labor Cost• Eliminate cash rooms or vaults

• Impact on front end associates

BEST PRACTICES

“Employee theft represents 43% of the total retail annual loss of over $33 billion, the highest contributor to overall retail loss.”1

1. Source: http://blog.lpinnovations.com/Loss-Prevention-Leadership/bid/46024/Employee-theft-higher-in-the-United-States; 2009 National Retail Security Survey

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Increase Visibility of Cash Over (Short) Performance

• Enhance accountability

• Improve audit processes

Improve Risk Management

• Utilize time delay functionality

• Manage withdrawal limits

Reduce Operating Supplies

Eliminate Multiple Banks

Improved Reconciliation

BEST PRACTICES

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Results Achieved

• Eliminated need for bank runs, reducing labor costs by 1.13 hours per day

• Deposit prep reduction .41 hours per day

• Till reconciliation process reduced by 50%(+)

CURRENCY PROCESSING SOLUTIONS (CPS)CLIENT SUCCESS – Quick Service Restaurant

Background

Fifth Third partnered with quick service restaurant chain to deploy remote cash capture technology across a national footprint

Realized net impact of $2,679,400 in annual profit contribution

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Results Achieved

• Reduced labor requirements by 6 daily hours

• Re-engineered processes with front end supervisors

• Deployed proof of concept that eliminated cash shortages

• Leveraged Series functionality for efficiencies in opening

• Developed deposit process to support register reconciliation

• Increases and Strips entered in POS prior to Recycler

• Established eFund process to ensure business continuity

• Integrated currency and coin solution

• Provided visibility to cash over (short) performance

• Returned $18,000 of vault funds per location to corporate

CURRENCY PROCESSING SOLUTIONS (CPS)CLIENT SUCCESS – Big Box RetailBackground

National big box retailer was seeking a new approach to eliminate its cash room and deploy its resources toward store sales activities