Fiserv Inc. says a recent deal has consolidated its position in the cash forecasting software market.
The Brookfield, Wis., banking technology vendor announced last week that it had bought Global Management Technologies Corp.'s CashMaster product line, which it says can help its bank clients offset rising expenses by freeing up money that can be used to generate revenue.
Fiserv acquired a similar product when it bought CheckFree Corp. in December.
It did not disclose the price of the CashMaster deal, which closed June 27.
"Banks are realizing that cash is an important part of their organization and needs to be managed more closely than it ever has been in the past," Brian Jorgenson, the director of product management in Fiserv's cash and logistics unit, said in an interview.
Banks must maintain a delicate balance when determining how much cash on hand they need. Too much will drive up their transporting and processing costs and limit the money available for loans and other services that generate revenue. But running short of cash can sometimes necessitate costly emergency deliveries to avoid displeasing customers.
The CashMaster application lets banks forecast how much cash will be needed in their branches, vaults, and automated teller machines by analyzing past use trends.
Mr. Jorgenson said accurate predictions of their cash needs can help banks reduce the amount of currency they must keep on hand above their reserve requirements and make more money available that can be used to help boost their top lines.
Banks can typically reduce by 20% to 40% the amount of cash they keep on hand above their reserve levels, he said.
CashMaster's customers include 10 of the 20 largest North American banking companies.
Fiserv said it plans to integrate the software into its iCom product, an online tool suite with cash inventory forecasting and other expense-reduction capabilities and expects to offer iCom to current CashMaster customers.
ICom was originally developed by Carreker Corp., a Dallas software vendor that was purchased by CheckFree in April 2007.
Simon Angove, Global Management Technologies' chief executive, said his company decided to sell its CashMaster operation and leave the cash forecasting market to focus on work force optimization products, which already account for 95% of its revenue.
Bob Meara, a senior analyst at the Boston market research company Celent LLC, said that, despite the increasing use of electronic payment methods, cash is used for about 30% of purchases at the point of sale, a figure that has remained steady for the last several years.
He also noted that the amount of currency in circulation is rising steadily, in part because of the "wildly growing 'grey market' economy — everything from restaurant servers tipped in cash to illicit drug deals and illegal day laborers paid in cash."
"The immigration trends in the U.S. alone support a healthy demand for cash for the foreseeable future," he said, which means that banks will need software to keep track of their cash requirements. "Fiserv knows that cash is still king and will remain so for some time."
Tom Brogan, a research director at TowerGroup, an independent research firm in Needham, Mass., owned by MasterCard Inc., agreed. "The cash forecasting industry will continue to be profitable in the future, particularly as transportation prices increase," Mr. Brogan said. "Banks will want to continue to be more accurate in forecasting and will always want to continue to optimize what they have on hand."
