Debating the Key Trends at Asia Cash Cycle Seminar

Post COVID-19, following Manila in 2022, the Asia Cash Cycle Seminar (ICCOS) headed to Bangkok this year, organised by Currency Research with the Bank of Thailand as co-host.

The conference, which took place 12-14 September, started with two workshops, the Asia Cash Management Association (ACMA) Annual General Meeting and a welcome networking reception in the evening.

The first workshop was reserved for central banks, while the second was hosted by ACMA in light of its recent report, ‘Keeping the Cash Relevant’. An engaging workshop followed an interactive discussion debating the report’s recommendations and seeking agreed strategies to ensure a safe and inclusive payment landscape.

Global trends

A keynote address to start the plenary sessions from the Bank of Thailand preceded a debate on global trends in cash and payments among representatives of the Bank of Thailand, Currency Research, Federal Reserve Board of Governors and Reserve Bank of India.

Some of the key points were:

• The Bank of Thailand has noticed a declining trend in automated machines and branches and an increasing number of EFTPOS transactions. 121 million bank accounts exist in Thailand, with 61 million debit cards, 26 million credit cards and 10 million ATM card users. Still, cash remains a significant player in the payment industry. From an electronic payment volume perspective, 80% of people use mobile/internet banking.

• Saudi Central Bank talked about ‘Sarie’, a real-time payment system launched in 2021, through which the Bank can process transactions up to 20,000 riyals. It is now available to all domestic and foreign banks across the Kingdom. Currently, 14 participants (12 banks and two fintechs) are participating in the system, with an additional nine participants in the pipeline. SCB expects the number of ‘Sarie’ participants to double in the next three years.

• Cash remains an essential payment method in the US. Although consumers are making fewer cash payments when compared to pre-pandemic, both on-person and store-of-value cash holdings remained above pre-pandemic levels in 2022, signifying 1) consumers’ demand for cash remains and 2) there may be a long-term impact from the onset of the pandemic on consumer cash holdings.

• Reserve Bank of India – cash by value declined to 27% of POS in 2022 from 71% in 2019. Cash requirements are rising, although the rate of growth has slowed. There is a paradigm shift as cash is increasingly being used as a ‘store of value’. The drivers are the popularity of alternative digital modes of payment from the pandemic.

The key learning is that the cash eco-system of the future requires the ‘non‐disruptive’ co‐existence of cash and digital payment options, estimation of demand, sustainability (production, distribution, disposal) and business continuity.

Cash contingency

An excellent presentation from Oesterreichische Nationalbank (OeNB), shared insights on cash contingency plans.

The findings were based on the ECB’s SPACE II study from October 2021 to June 2022 (SPACE stands for Study on the Payment Attitudes of Consumers in the Euro Area). Austria emerges from the study as a country in the euro area where the frequency and preference of use of cash is very high. 70% of transactions in Austria call for a contingency plan for cash supply in the light of an emergency/blackout.

OeNB also talked about emergency initiatives such as distributing unfilled envelopes with tips for emergencies as information material to engage and encourage cash stockpiling. It placed envelopes in 380 post offices throughout Austria from February-March 2023. As of now, it has distributed approximately 300,000 envelopes The aim is to raise awareness of crisis preparedness by keeping small cash denominations at home.

Sustainability efforts

The Bank of Thailand talked about its sustainability efforts which, since 2008, have involved green building concepts, wastewater treatment and recycling, and energy-saving measures to adopting advanced technological upgradation on materials and substrates.

In 2021, it reduced the use of heavy metal compounds in ink, resulting in an 8.5% increase in maximum productivity. It also installed a banknote coating machine to prolong the life of banknotes, and an air treatment system to treat air pollution from banknote production.

Moving forward in 2022, it introduced its first 20 baht polymer banknotes, resulting in an energy saving of 400,000 kWh. At the cash cycle level, it has consolidated cash processing and reduced redundancy in the operation process between the central bank and the cash centre.

Brinks shared its sustainability efforts with a focus on fleet efficiency, optimising routes and expanding digital solutions to reduce emissions from its fleet. It is investing in fuel-saving and alternative fuel technologies to reduce its dependency on fossil fuels and implementing energy conservation best practices that reduce waste across its global facilities and operations. It added solar panels to 181 vehicles in the UK, Ireland, Singapore, Hong Kong, Japan, and the UAE, and expects to add panels to another 200+ vehicles by the end of 2023.

G&D called for standardising cash transportation to maximise the efficiency of banknote transportation in the cash cycle across the borders of different players. Higher standardisation throughout the cash cycle will reduce the cost pressure on cash, increase cash cycle performance, and keep cash competitive against other means of payment. In addition, it will lead to significant efficiency, growth, and a reduction of the carbon footprint.

The key takeaways are protecting, being flexible, forecasting (understanding cash circulation) and collaborating.

Another session on ATM evolution explored trends, future outlooks and sustainable business models. Sustainability was the critical point of discussion, as it is becoming a board agenda for corporations and governments across the globe.

Safe and payment landscape

In addition, there were three plenary sessions on inclusive payments, efficient cash cycle, technology and automation.

G&D shared their policy on creating a resilient and efficient cash cycle, Brinks Indonesia their digital retail cash solution and Bank Negara Malaysia a SWOT analysis and concerns on increasing cyber-attack sophistication and its threat to operational technology. Automation is a crucial enabler for efficient cash operations, and the journey ahead is to improve resilience to cyber threats.

Currency Research’s next Cash Cycle Seminar, for the Americas, takes place in Orlando, Florida from 27-30 November 2023. Visit https://currencyresearch.com/ for more information.