Cash Works… But It Could Work Even Better!

This is the title of the Koenig & Bauer Banknote Solutions (KBBNS) white paper on cash innovation & sustainability, issued on 23 January 2023. ¹

The white paper describes the relationship between how the banknote product is manufactured and how it is distributed, accessed, used and recycled. It argues that there is the opportunity to manage cash differently, reducing costs and environmental impacts, and to make cash more resilient. For a company traditionally associated with banknote production machinery, this paper is an unexpected, but welcome, contribution to thinking about the future.

Mark Stevenson, Market Development Manager at KBBNS, says, the ‘white paper clearly presents the relationship between the banknote product and the banknote service system (cash cycle) and demonstrates not only what we can do to create a sustainable future for cash but how we can do it, as a community. We don’t have all the answers, but by collectively engaging in future-thinking around this white paper we believe that innovators can fill the gaps on the complex mosaic landscape of cash and in particular banknotes by connecting enabling technologies with current and emerging requirements.’

The white paper analyses the key factors impacting cash (in particular banknotes) sustainability and explains what the principal drivers of the ecological impact and cost of cash are. It also explains how these drivers are compromising the public’s choice of payment tools, which is resulting in significant cash infrastructure deterioration and access to cash difficulties. All of these phenomena will ultimately have an impact on demand for cash in the future.

The key takeaways from the white paper are that, globally, demand for banknotes continue, but banknote functionality is shifting (from a transaction to a legitimate store of value role), and many cash cycle actors will have to adapt their business models to support the change process. The cash community is working hard to ensure a sustainable evolution in the way we manage cash in society and banknotes have become better over time and meet most user expectations. The banknote product itself is not broken (albeit that it can be marginally improved). The banknote service system is, however, broken and, having progressively introduced layers of friction to cash management, must be significantly improved, in particular by removing friction.

Change will take the form of new banknote access, distribution and recycling models. Such models can only be developed through cross-cash industry collaboration, with central banks playing a pivotal role in their creation. The key to making all of this possible is the development of physical/ digital ‘bridging technologies’ that connect the physical banknote with data.

The white paper presents some new banknote technologies aimed at improving the way they are accessed, moved and recycled in society. KBBNS sees data as an enabler of change both in terms of central bank regulations and by enabling the global cash community to radically transform cash management processes.

KBBNS believe access to data is available now given that banknotes are data- carriers already. The physical object can be connected to digital ecosystems, thereby bridging the data gap about where cash is, who needs it and how to connect supply with demand. Sharing this data will allow radically different cash management solutions.

The white paper includes information on an emerging family of what KBBNS calls CUT® (Cash Utility Technologies). The paper presents these as ‘bridging technologies’ and provides detailed use cases to demonstrate how their application can result in quantum improvements in terms of the ecological footprint and the cost of cash in circulation.

KBBNS views this white paper as the beginning of a journey and an invitation for central banks and cash cycle stakeholders to work together to develop a better understanding of what options are available to reimagine and redefine the banknote and its associated service system to create a more equitable and sustainable future for cash.

1 https://service.kba-notasys.com/cashinnovation/whitepaper/#1.