Cash and Digitalization – Opposites Attract
There’s a great deal of discussion about the future of cash, not least given digital transformation. Substrates and software do not rule each other out in this respect – in fact, quite the opposite: cash can benefit from technological development by means of Artificial Intelligence (AI) – meaning that central and commercial banks can benefit too.
Cash is under pressure in the public eye. People talk about the “war on cash” and “demonetization”. The drivers of this trend are the fight against illegal money and corruption, as well as the desire for lower cash management expenditure in retail. And of course the representatives of digitization also argue against coins and notes, in order to enable the entire money cycle to be seamlessly reproduced in software.
However, this technological development also opens up the great opportunity to make the production of cash and its distribution significantly more cost-efficient than previously. The basis of this is formed by extensive analysis along the money cycle. This enables intelligent conclusions to be drawn from very small deviations in note fitness, which result in significant effects for central banks. The objective is to make the development and production of banknotes even more efficient.
“Connected Banknote” – Substrates and Software Complement Each Other
The technological foundation
Big Data and Artificial Intelligence (AI) form the technical basis for the digitization of the banknote industry – and it is only at first glance that this represents a contradiction to supposedly analog banknotes. “Banknotes are a highly complex, high-tech product that contain around 40 to 50 security features,” explains Oliver Pannke, Head of Business Line Software and Eco-Systems at G+D Currency Technology. The central banks’ processing systems record these features in detail: advanced test machines extract 800 to 1,000 data points from each banknote, for instance relating to the durability of security features such as infrared detectability or fluorescence. Individual user data cannot be recorded from this procedure, and information of this type always relates to the individual banknote.
In the future our smart analytics can tell if the branches of banks are in the right locations and equipped with sufficient capacity.«
“If you collect these data over a long period of time in a country, you can analyze the persistence of the entire banknote or individual security features under prevailing regional conditions, and which features are the most durable,” reports Pannke. As a result, digital technologies can be used to associate the circulation data of the notes with the respective customer’s requirements, and optimize future series both with respect to cost-efficiency and security. “This development shows that banknotes also benefit from digitization – the future lies in the Connected Banknote.”
In order to ensure success in this respect, G+D Currency Technology uses cutting-edge procedures from the areas of deep learning, machine learning and data mining. The algorithms are trained for their tasks by the development team, using half of the available data stock. Once the model has been completely put together, the other half of the data is used for intensive testing by the researchers. The closer the software forecasts are to reality, the greater the operational capacity of the models. The results can be accessed in a browser via the G+D Currency Technology Analytics Platform, and customers can use these results for further analysis with the aid of individual business intelligence tools.
Diverse Use Scenarios
Areas of application for the “Connected Banknote” at central banks. For example, it can be calculated whether a protective lacquer for a specific banknote series is longer lasting than a reprint. In addition, the data enables conclusions to be drawn about the cost-efficiency of the branch network: “In the future our smart analytics can tell if branches are in the right locations and equipped with sufficient capacity,” says Pannke. Data that is recorded in ATMs is also used in the analysis. The technology is currently developing at extraordinary speed, reports Pannke: “Banknotes are now taking the next step toward the Industrial Internet of Things.”
Trend Report Digitalization
Additional information on the use of AI and the economic potential of the “Connected Banknote” is provided in an article in our Trend Report.