Banknote processing: an automated cash cycle

From printing to marketplace, via your back pocket: the life cycle of a banknote is a complex journey often taken for granted. The meticulous handling, processing, and distribution behind the scenes are essential processes in the cash cycle. 

Historically, these processes were completely manual. Bank clerks and merchants alike would sit hunched over their desks by candlelight, laboriously flicking through each note and stacking coins before bagging them up and noting the sums in a thick ledger. All it took was the slightest distraction to reset the whole process. Naturally, this time-consuming and inefficient method was prone to errors and not fit for the modern world. Thankfully, these tasks are now handled by automated banknote processing systems.

While the word automation often invokes fears of lost jobs, in the context of the cash cycle, it’s a catalyst. Automation is not about replacing humans, but rather empowering them to better manage the complexities of cash handling in a more efficient, reliable, and secure way. 

“Cash is the most trusted form of payment,” says Christian Mitterhuber, Head of Product Management Systems and Automation, G+D. “To maintain that trust, the banknotes need to demonstrate a high standard of quality and reliability. This is what drives the need for automation in banknote processing.”

A more efficient and sustainable cash cycle

Modern technologies, such as the BPS^® M^evo the latest generation in the BPS M serie ensure a high standard of quality by automating almost every step of cash center operations, from feeding, sorting, and checking, through to the packaging and readying of bundles for transit. Such high throughput levels – more than one million banknotes are processed each day – and end-to-end capabilities go a long way to expediting cash center processes, which in turn makes the cash cycle more efficient.

However, efficiency isn’t everything nowadays. As global environmental efforts increase, so too does the pressure on businesses and governments to adopt sustainable practices and reduce the footprint of their activities – central banks and cash centers are no exception. Here, automation can help make operations more sustainable. For example, solutions like NotaTrayFilling enable cash operations to replace single-use plastic and banderole paper with reusable banknote trays. To put these savings into perspective: Per BPS^® machine that is 100% converted to TrayFilling, the single-shift model saves around 175 km of banding per year. Meanwhile, more advanced fitness detection features further contribute toward minimizing waste.

Such solutions are the result of the rapid evolution of banknote processing systems over the past half-century, which has added new layers of efficiency, resilience, and reliability to the cash cycle. That the vision of a fully automated cash cycle is now within reach is the result of three distinct phases of automation: first the machine, then the cash center, and now the wider cash cycle. But none of this would have been possible without the pioneering efforts of two of the most important figures in G+D’s history.

The Age of the Machines

Before cash center operations could be automated, the first step was automating the machines themselves. The very first counting and sorting machines were patented in the US early in the 20th century¹, but it wasn’t until the late 1960s that the advent of microelectronics created new opportunities for automation in banknote processing. With the founding of the now defunct G+D subsidiary Gesellschaft für Automation und Organisation (GAO), Siegfried Otto, former owner and CEO of G+D, and Helmut Gröttrup, chief engineer at GAO, were primed to play innovative roles in developing the first generation of banknote processing systems.

In many respects, GAO was ahead of its time as a pre-modern start-up. Together, Otto and Gröttrup sparked G+D’s rise as one of the world’s leading high-tech companies, and that journey started with the development of ISS 300. This first generation, semi-automatic machine, which was first introduced by the Deutsche Bundesbank in 1977, became the worldwide standard for banknote processing systems, selling over 2,100 units.

This transformative technology, which not only counted notes at high speeds of up to eight banknotes per second but also sorted them according to authenticity and fitness, was the first in a long line of banknote processing systems that G+D would bring to the market in the coming decades.

By the 1980s, advancements in microprocessing technology had paved the way for the next generation of machines. “If the first generation of banknote processing systems was about automating the machine to speed up the counting and sorting process while reducing human error, the second generation was about adding new capabilities to the machines and further streamlining cash center operations,” says Alfred Schmidt, former G+D director of banknote processing systems. These capabilities included the banding and debanding, bundling, and online destruction of unfit notes – all features that are now commonplace in modern banknote processing machines.

Fast forward to the present day and the third generation of banknote processing machines is almost unrecognizable from the machines developed by Otto and Gröttrup. In addition to cutting-edge technology and multifunctionality, modern systems like the BPS M^evo are highly customizable to cater to all customer needs. “The latest generation of banknote processing systems is designed with flexibility in mind,” says Mitterhuber. “They cater not only to the users’ various needs in the present, but also to those in the future.”

Looking forward: the future of banknote processing

As the industry looks ahead, being future-proof and adaptable to new trends, opportunities, and technological developments will be critical to success. Cash cycle stakeholders will need to find the balance between achieving efficiency and cost-effectiveness, while also addressing ongoing environmental concerns. 

One way to achieve this balance is by introducing new operational standards. The NotaTray^® Ecosystem, for example, not only reduces supply costs within cash centers, while contributing to environmental sustainability, but also provides greater efficiencies further down the cash cycle. For example, cash transported in NotaTrays can be filled into ATMs twice as fast as before – a significant time saver. Removing redundant materials also builds resilience against supply chain disruptions.

But making the processes as smooth as possible is not all. It’s also about optimising the systems. The production of the latest generation of NotaTrays, for example, causes 50% fewer CO₂ emissions than the earlier models.

“We never stop looking for new ways to innovate,” says Mitterhuber. “Just as the freight container once transformed global logistics, we believe the NotaTray^® Ecosystem can revolutionize the cash cycle.”

Another way the industry can optimize is by the increased adoption of digitalization and data-driven decision-making. Enhanced data capture and sharing, coupled with improved logistics tracking, can enable better forecasting, planning, and management of cash throughout its life cycle. This, in turn, can have environmental benefits by minimizing surplus cash and optimizing supply chains. 

“Digitalization and the extended sharing of data not only provide logistical and operational benefits, but also offer vast opportunities for collaboration between industry stakeholders – in both the public and private sectors. This, until now, hasn’t been particularly forthcoming. However, there has never been a greater time in history to pool together the collective strengths of different industry players,” says Mitterhuber. 

As a reliable partner, G+D is uniquely positioned to facilitate stronger collaboration among central banks, commercial banks, cash-in-transit companies, and other industry stakeholders around the globe, to create a more streamlined and efficient cash cycle ecosystem – with automated banknote processing systems at its core.

Published: 31/10/2023