The “action fields” within the cash cycle have shifted significantly towards sustainability in recent years - how's G+D responding to this?
By somehow “separating” it into two parts, or let's say “dividing” the cash cycle roughly into its two major value chains: the value chain of creation (VCoC) and the value chain of distribution (VCoD).
Because this allows us to look much closer, more focused, and specifically into these action fields – and by doing so to find suitable levers where we can strengthen and push multiple sustainability efforts. See: within the VCoC we naturally have a lot of influence and control over the processes operating within it, constantly looking for ways to improve its sustainability. It's here where we focus primarily on ESG, including the use of environmentally friendly resources and the consideration of social and governance aspects. This includes ensuring equal opportunities in raw material procurement, sustainable use of natural resources, creating equal employment opportunities, and promoting diversity.
And within the VCoD, the value chain of distribution?
Here, our action fields are consequently much broader with more players involved. Collaboration, innovation, and working with major industry players are key when it comes to sustainability within the cash cycle. We focus on optimizing processing, efficiency, resilience, and sustainability, as well as on the re-purpose of banknotes at the end of their lifecycle. For example, solutions such as the NotaTracc® system which offer two fields of application: automation of modules for intelligent cash processing and effective cash logistics with a standard tray. The core element of the NotaTracc® system is a standardized banknote tray, allowing secure transport, storage, and beyond, picking and placing of loose banknotes. It can be used within cash centers and be very well implemented as a standalone or in combination with other solutions for intralogistics, depending on volume and distribution model by companies, or other partners in the cash cycle – not just significantly reducing handling efforts but also optimizing cash centers, reducing waste, and minimizing the use of single-use plastic.
Besides these specific solutions, how would you describe G+Ds overall role within both value chains?
I would frame it as a decisive, key role, especially when it comes to working with central banks to shape the distribution and creation of banknotes. This includes identifying product needs and improving distribution. G+D uses the given platforms to share experiences, identify thought leaders, to think ahead - not only to sell products but also to learn from others. In terms of innovation, the VCoD is a key focus within which we are working in two dimensions: toward effective infrastructure solutions and towards an intelligent digital solution. The aim is e.g., to make transportation more effective, reduce the impact on its carbon footprint, and optimize everything from storage to delivery.
On the other hand, the concept of cooperation, collaboration, and knowledge-sharing is relatively new to the industry, isn't it?
Absolutely. While collaboration is key to achieving these goals and while we simultaneously continue to develop our solutions, we must admit that our industry has been more protected than others. That needs to change. Indeed, the banknote itself is an entity that has to be protected - but collaboration doesn't necessarily mean that we can or have to reveal all its functions and "secrets."
Gurpal Singh, Head of Portfolio & Technology Management Currency Management Solutions
»It is more about understanding that the whole cycle needs to be pushed towards a greener future«
It means bringing the key players in our industry together, and here central banks play a crucial role, as a kind of "hub" that works as a multiplier. That means sharing with them what we learn from the market. We want to be their "eyes on the market", then share our knowledge and observations with as many as possible and elaborate our findings in studies, on stages, in prototypes, and in discussions. This leads to the strategic thinking of building various cash cycle models – centralized, delegated, or the ones running in public-private partnerships.
There's no need to convince central banks to act toward sustainability?
ESG is a topic on almost every central banks strategic radar, now it is more about understanding that it is not just about money, but the whole cycle needs to be pushed towards a greener future. For this shift of mindset, central banks are a crucial multiplier and, again, they are the thought leaders to do so. For example, if we want to optimize how cash is delivered to and from cash centers, we need to optimize transportation. And there are many ways to do that, but it can only be done in a larger framework that could be defined by the central banks or under their governance, depending upon the cash cycle model.
G+Ds projects in Egypt e.g. could be kind of a blueprint for that?
Yes, Egypt is a great example. To provide an end-to-end solution that would secure the country’s complete cash cycle – from infrastructure and banknote design to printing, storage, and distribution of currency – the central bank turned to G+D as general contractor to build and coordinate the large critical infrastructure to the highest physical and digital security standards. But there are other examples as well, where we are not only establishing international service level standards for CIT companies or multi-bank processing centers to consolidate cash processing of mono-bank cash centers. To improve service levels and reduce risks, to minimize system-wide costs we are also driving a whole market change …
… while simultaneously raising awareness of the challenges behind cash logistics technology, right?
Exactly. This could sensitize people to what we call the "cash paradox" - an increasing demand for banknotes despite a decline in cash payments - which may be explained by the fact that people use cash during crises to cope with uncertainty. They are holding on to something they can trust. Cash is a reliable ecosystem when it comes to crises. For this supposed paradox, we need and want to understand what is happening with cash, and that means transparency and smart data use. Central banks can influence this by having an overview of what happens to cash so that they can plan and optimize cash use. In the event of a crisis, the cash infrastructure must be resilient and not fail when fees and legislation are pending. A resilient cash infrastructure can be complemented by data and better planning in times of crisis.
And not to forget to manage rising costs, ...
... whereas we need to minimize waste and use our resources effectively, right. This can be achieved through automation, digitization, and standardization. Standardization means that the key players work together to create a standardized way to bring cash into the processing center and send it through different access points. Plus, standardized transport of banknotes into and out of processing centers extends the life cycle of the banknote, which is good for the environment. In terms of climate change, we need to think about more environmentally friendly products, such as using sustainable materials to extend the life cycle.
»All challenges are fundamental to making cash sustainable, but environmental sustainability is a priority«
To sum it up: what’s the most important challenge for achieving a greener or more sustainable cash cycle?
All challenges are important to achieve a sustainable cash cycle. However, if we focus on environmental sustainability, then introducing greener products is critical. We need to work on making our cash centers and transportation more energy-efficient, which can be supported by standardization and automation. All challenges are fundamental to making cash sustainable, but environmental sustainability is a priority.
Sounds more like a series of smaller steps or "baby steps"?
Yes, sustainability is achieved through smaller steps. So, if we can establish data collection standards for cash transparency across the ecosystem, that would be a major milestone. Once we have cash transparency, we can take action depending on the goals we want to achieve. G+D is already taking these steps towards a greener future with our greener products and solutions. To reach major milestones, we are constantly pushing for cooperation, collaboration, and innovation. That's where sustainability actually happens.
Louisenthal offers a range of substrates for different currency requirements, security levels, circulation conditions and denominations. And if you’re planning a completely new banknote series, we can advise you on a mix of different substrate types and features across the series.