"Optimization" is the magic word in much of banking technology in early 2009, as even the healthiest banks look to ride out the recession by focusing on capital preservation and efficiency. In the treasury function, the latest optimization comes in the form of cash supply chain management and forecasting software that can dramatically lower the amount of cash needed to meet system requirements, as well as using deposit reclassification to lower FRB reserve requirements.

This technology has long been the province of money center and regional banks, and to great success. Several years ago, when the Fed funds rate was about six percent, financial services holding company Synovus, with more than 30 banks under its umbrella, wanted to reduce non-earning assets and optimize revenue, while reducing costs and managing the risks associated with cash. The now $35 billion asset institution bought into Fiserv's iCom cash supply chain management software, and after implementation reduced its cash requirement from $145 million to $102 million, says Rick Sorenson, svp of operations. (Cash demands have increased since then due to growth and seasonal factors.) And, with the reclassification of deposit accounts, Synovus was able to reduce its FRB reserve requirements from $185 million to less than $80 million, saving approximately $2.6 million at historic Fed funds rates. At the same time, Synovus began utilizing Wachovia for its cash demands and was able to shut down one of its vaults, eliminating several FTEs.

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