Arkady Trachuk: The cash turnover industry is headed for global changes!12 ноября 2014 года
Arkady Trachuk: The cash turnover industry is headed for global changes!The work of the 6th International PLUS-Forum “Bank Self-Service, Retail and Cash Turnover 2014” was opened by Arkady Trachuk, General Director of Goznak; his presentation became the program statement for the whole event. Today we offer the broadened analytical material prepared on the basis of Arkady Trachuk’s report, to the attention of the readers of “PLUS”. From our point of view, the article will be interesting to both the specialists who failed to visit our event this year for some reason, and the delegates of the October PLUS-Forum.
Starting the talk about the key tendencies of the modern cash turnover, one can’t help noting: just like many market experts predicted very justly a few years ago already, the cash turnover system is on the threshold of drastic changes today. In July 2014 the Government of Ecuador announced issuing the first digital currency in the world by the Central Bank of the country.
The currency that has no name so far will start circulating in the country in December 2014 in parallel with the official currency of the country – the US dollar. At the same time, usage of other so-called “crypto currencies”, for example BitCoin, will be prohibited. The President of Ecuador Rafael Correa noted that the new currency will be used for paying salaries of the state officials. Besides, it should allow payments with the help of a mobile phone.
Has it finally happened? We see how the electronic money that appeared as private projects, picked up and developed by commercial banks is becoming the legal payment means emitted by the central bank. So far we can only guess how the system of state electronic money will develop in Ecuador. But it is obvious that the very fact of the beginning of such a project is an important event. Further development may lead to a fundamental change of the whole payment industry.
In recent years changes happen more dynamically than ever in the payment sphere. These changes are the consequence of new demands of the government on the one hand and business on the other. Among them there are the provisions of higher speed of payments execution, higher transparency of payment operations, processing of larger volumes of money, involvement of a larger number of users etc.
Therefore there appears a question: to what extent will the payment landscape which has been the basis of cash turnover for centuries be preserved?
In the latest decades there have always been debates about how long the world will endure cash money, which was called dirty, criminal, ineffective. But till now cash has been in circulation and moreover, its amount only grows from year to year. It is also significant that the demand for cash comes from “the bottom”, which demonstrates its fundamental importance for the payment system functioning.
However it is important to point out that the increase of cash volumes in circulation is taking place against the background of a considerable change of the very paradigm of creation and organization of banknotes and coins circulation. The modern banknote has ceased to be a unique object but become a part of the system providing cash turnover. The banknote today is facing a task of not only embodying a certain value and protect it against counterfeiters, but to become the core around which the effective system of transmitting the cost and carrying out payments is built. The banknote has turned into a technologically complicated tool of cash turnover used in a number of various directions. They include authentication based also on machine-readable features and processing systems today, which help to facilitate and optimize the work of specialists at all the cash processing stages, including bank cashiers and retail cashiers. Besides, the banknote today is a unique instrument enabling smooth transfer from the segment of non-cash payments to the segment of cash payments and back thanks to the usage of ATMs and other self-service devices working with cash.
The first step was mass spreading of ATMs in the 1980s – 1990s, which helped to solve the problem of transfer from cash to non-cash money. The next step was broad spreading of counting and sorting machines designed not only for counting and authentication of banknotes but also prepare them for ATMs.
The application of banknote processing machines set the task of equipping banknotes with special machine-readable features. Such features have been widely spread since the 2000s, and are now present on banknotes of all the countries. Beforehand the banknotes were projected without taking into account the requirement of their automatic processing. The equipment manufacturers looked for peculiarities to provide automatic authentication of banknotes themselves. Today the banknote design is developed in a way permitting to take into account the automatic processing requirements maximally from the very beginning. Our enterprise – Goznak – is engaged in an active dialogue with the equipment manufacturers. The specialists of the company have developed various machine-readable features providing banknote authentication at various levels, and in the present conditions such security is effective.
The application of counting and sorting machines and banknote-accepting devices has raised the matter of banknote durability. One of the first solutions in this field was the application of polymer substrate. Today a number of countries use polymer substrate for banknote printing. Among them there is Canada, for example, it has transferred to polymer a few years ago. Great Britain is planning to start printing low denominations of banknotes on plastic. But today solutions based upon durable paper substrates which turn out to be better protected and environmentally safer than plastic have appeared and are effectively applied. Goznak has also developed solutions of the kind.
The existence of a large number of banknotes in circulation has caused the central and commercial banks to solve the matter of necessity of optimization of cash turnover with the aim of making it more effective and cheaper. One of the solutions has been the development of program products to predict and optimize cash balance and logistic schemes, to manage the ATM networks etc. Another solution was application of organizational innovations, for example, trust-based repository of banknotes at the banks, which decrease the costs of their transportation and sorting.
The work of professionals creating banknote authentication sensors, cash processing tools and match these tools at various stages etc. is behind each of the directions.
Therefore it seems quite evident that the next step in the cash turnover reformation will be directed at using the data received in the process of cash turnover and instrumental control for new aims. It is not a secret that today the absolute majority of banknote counting and processing machines used by the national banks have the function of number recognition. The modern technical resources enable the banks to collect and store all the received information about the numbers of banknotes that have passed through their systems. Moreover, today one can affirm bindingly that for the first time in the whole history of cash turnover the banks have got the opportunity to store not only the numbers but also the images of banknotes. Naturally it is so far quite a laborious and expensive direction requiring storage of large volumes of data, but it is important to stress that it has become theoretically possible. And it is quite possible that the application of a combination of such technologies as recognition of the banknote image and machine-readable features together with storing large volumes of data and their operative processing will give life to principally new opportunities in the cash turnover sphere, which will be in great demand by both national and commercial banks.
In recent year our company concentrated its efforts not only on developing new visual authentication features of banknotes, but also on creating innovative machine-readable features as well as on such tasks as increasing the banknote durability and convenience of their processing with the help of various automated devices.
Thus, the joint results of the work of banknote manufacturers, national banks emitting cash as well as all participants of the cash processing infrastructure including commercial banks, retailers as well as self-service device manufacturers and software solution developers allow us to confirm today that the age of cash is still far from conclusion.
The modern banknote production and processing industry has things to offer in order to preserve and enlarge the advantages of cash payments. Other payment instruments competing with cash so far cannot provide the same level of reliability and security. The banknote evolves and is modified together with the cash turnover system, answering the requirements of the time. The present banknotes are first of all an element of a complicated data processing and storing system, and this very role of cash will only be broadened with time.
We’ve spoken about just a few concrete changes in the cash turnover sphere. These changes affect all the levels of the payment system – banknote production, activity of central and commercial banks, equipment manufacturers, retailers. The modern banknote can no longer exist without a whole “service” infrastructure and its future will also depend on the maturity of the infrastructure.
In the conclusion I would like to say that the International PLUS-Forum “Bank Self-Service, Retail and Cash Turnover” held by “PLUS” Magazine for the sixth time already, is in full measure a place where all market participants can share their opinions about the industry development tendencies most effectively, and the equipment exhibition is one of the most impressive expositions of the kind in the Russian Federation. I’m sure we will provide the efficiency of the Russian payment system by joint efforts!