Statistical and Artificial Intelligence Based Forecasting Approaches for Cash Demand Problem of Automated Teller Machines

Abstract

The efficient management of cash replenishment in Automated Teller Machines (ATMs) is a critical concern for banks and financial institutions. This paper explores the application of statistical and artificial intelligence (AI) forecasting methods to address the cash demand problem in ATMs. Recognizing the significance of accurate cash predictions for ensuring uninterrupted ATM services and minimizing operational costs, we investigate various forecasting approaches. Initially, statistical methodologies including Autoregressive Integrated Moving Average (ARIMA) and Seasonal ARIMA (SARIMA) are employed to model and forecast cash demand patterns. Subsequently, machine learning techniques such as Deep Neural Networks (DNN) and Prophet algorithm are leveraged to enhance prediction accuracy. We assess the performance of these methodologies through rigorous analysis and evaluation. Furthermore, the paper delves into the integration of these forecasting approaches within an overall decision support system for ATM cash management. By optimizing cash replenishment strategies based on accurate forecasts, financial institutions aim to simultaneously enhance customer satisfaction and reduce operational expenses. The findings of this study contribute to a comprehensive understanding of how statistical and AI-driven forecasting can revolutionize cash management in ATMs, offering insights for improving the efficiency and cost-effectiveness of ATM services in the banking sector.