#G+D World #Annual Report

Digital twins for the core business: how G+D is shaping the future

Annual Report
10 Mins.

How shall I pay today – cash, card, or digitally? Does my smartphone still have a SIM card? Do I need a passport to get through airport security or can I just use my cell phone? Are public authorities or my energy supplier storing critical data on a central server – or is it safer in the cloud? The answer to these questions is usually: both! Giesecke+Devrient offers appropriate solutions that always share the same focus: G+D secures essential values with security technologies that create confidence and make the lives of billions of people more secure.

Paying for goods and services, making phone calls, connecting with others, traveling, providing proof of ID, browsing the web – for these and other daily activities, consumers, citizens, businesses, and other organizations expect a range of options, reliable security, a high level of convenience, and innovative technology. G+D’s products and services provide all of these across the four core areas of payment, connectivity, identities, and digital infrastructures. Two things are particularly important to us. We work hard to improve existing products, such as banknotes, payment cards, SIM cards, IoT connectivity solutions, ID documents, and IT security solutions, taking them to the next level of technological innovation. Simultaneously, we are pursuing a strategy of adding digital twins to our existing portfolio. In the strict sense, a digital twin is the digital model of a physical object, such as a machine. Applied to G+D’s business areas, it means adding “digital twins" in various forms to existing solutions. 

 “It’s about expanding G+D’s portfolio to include digital components, which will co-exist with the existing options in areas such as payment,” says Jan Thyen, Head of Group Strategy and Corporate Development, G+D. “This gives our customers and end users even greater freedom of choice.” 

Ralf Wintergerst, Group CEO of Giesecke+Devrient, explains: “Throughout G+D’s 170-year history, progress and change have always been firmly embedded in our identity, and they will continue to shape our future. We are constantly reinventing ourselves – it’s a fundamental part of who we are.”

Finger on a mobile with the intention to press the pay button

Central bank digital currency (CBDC) gaining in popularity

In the Payment segment, continual expansion of the available payment methods is a good example of the digital twin strategy. People carry cash and payment cards in their wallet and also have payment apps and virtual cards on their cell phones. Online payment is a further option. G+D is the only provider in the world to offer a complete range of all popular payment methods. To date, we have printed 160 billion banknotes for a range of countries, while over 500 million customers a year receive a new payment card made by G+D. Our customers and partners include 145 central banks, all major payment schemes, and over 700 commercial banks. 

This variety of payment methods does not signify the end of the traditional banknote – quite the opposite, in fact! It might come as a surprise to learn that the amount of cash in circulation continues to increase, even in the digital age. Banknotes may have been around for centuries, but they are not some ancient relic. G+D has transformed them into a high-tech product that can be equipped with tiny microscopic mirrors, for example, like the RollingStar® security thread, or which incorporate covert security features, such as those found in our M series. This enables central banks to stay one step ahead of counterfeiters. Sustainability is also increasingly becoming a priority. G+D’s innovative “Green banknote” is made from environmentally friendly materials using low-resource production processes. With its long service life and advanced security features, it makes a crucial contribution to a more environmentally friendly cash cycle. In the same vein, G+D launched the Green Banknote Initiative. The aim of this open dialog platform is to make the production and lifecycle of banknotes more sustainable, e.g. by reducing greenhouse gas emissions and using resources more efficiently. 

Secure and easy payments for everyone – that is the objective behind central bank digital currencies (CBDCs). Ninety percent of central banks are currently exploring central bank digital currencies. CBDC is a completely new secure, universal, and inclusive digital payment method. The list of advantages is long because CBDC combines the benefits of both cash and cashless transactions. It is legal tender issued by central banks. Unlike with commercial offerings from financial services providers, it is not necessary to open a customer account or pay fees. People without a bank account can also use CBDC – and it is possible to make a payment even if no Internet access is available. G+D was quick to recognize the importance of CBDCs and launched Filia®, a solution that has already picked up a number of awards. Among the banks partnering with G+D is the Bank of Ghana, which is already piloting a digital currency, called the eCedi. The Central Bank of Eswatini and the Bank of Thailand have also both chosen G+D for their CBDC roll-outs. “Thanks to its network potential, central bank digital currency is the driver of the digital economy. New businesses can focus on their business model, with the payment function being provided and guaranteed by the state,” says Wolfram Seidemann, CEO of G+D Currency Technology. “Filia® is a platform for innovation that enables a wide range of exciting applications: from offline person-2-person to programmable payments. It’s also a benchmark for the carbon footprint of digital payment solutions.”

Woman sitting on a couch with laptop and payment card

Payment cards: innovative, sustainable, digital

G+D’s payment cards are likewise innovative and sustainable. The range includes cards made of recycled material that support the lifestyle choices of their users, cards made of metal that make customers feel particularly valued by their financial services providers, and cards that incorporate biometric smart technology for payment authentication. Since payment cards offer significant growth potential, G+D acquired the US business of rival firm Valid in December 2022.  

Digital twins of these physical products are also becoming increasingly popular. “Cards are no longer just something you carry in your wallet. As a stored payment method, they are the backbone of mobile, contactless payment via smartphones and in e-commerce – both of these fields have huge growth rates,” explains Gabrielle Bugat, CEO of G+D Mobile Security. To ensure that remains the case, a key expectation of banks, retailers, and consumers must be met: security. G+D ensures that data is encrypted (tokenized) in the digital card and thus not visible to unauthorized parties. And if users lose track of where their payment credentials are stored, our Convego® Token Cockpit lets them see what payment information is tokenized, giving users transparency and control over their data at all times. For the commercial banks that offer these G+D services, a positive side effect is that they boost customer satisfaction. 

Customer loyalty and confidence are crucial in e-commerce. The problem is that retailers are having to decline more and more transactions – due to suspected fraud or because the date on a stored credit card has expired, for example. Issues like these when shopping online can mean customers abandon transactions and stores then lose the sale. Tokenization is a way of providing security for these transactions and delivering a smoother shopping experience for customers. It is now also possible to pay and check out with a single click, rather than having to use multiple apps. The statistics show that online stores benefit from more satisfied customers and higher sales with this technology. These and other solutions for securing transactions are provided by G+D in conjunction with its Netcetera subsidiary. Following significant shared success in this field, G+D increased its shareholding in Netcetera in February 2023 and now holds a majority stake.

Man in a machine room with a laptop in his hand

The Internet of Things: from connecting everyone to connecting everything

Networking, communicating, and doing business via the Internet has been routine for most people for many years now. We already know that the Internet connects everyone – but now the Internet of Things (IoT) is going further and connecting literally everything: sensors, machines, devices, factories, cities, vehicles. This is largely made possible by fast 5G wireless network technology. Estimates suggest that by 2026, there will be around 26 billion digitally connected devices in the IoT. This market is growing at a huge rate, with 3,500 new devices connecting to the Internet every minute. In the consumer IoT segment, these include smartphones, wearables like smart watches, and tablets. In enterprise IoT, smart factories and self-driving trucks are two of the elements that collectively make the IoT the largest machine ever built.  

Of pivotal importance for security in cellular IoT is the SIM card, which serves as a kind of ID card for a device. This enables it to authenticate itself and establish reliable connections. “As a pioneer, G+D launched the world’s first commercial SIM card in 1991. We currently manage well over three billion SIM cards that are used in devices all over the world. In addition, we recently reached the 100 million mark for consumer eSIM downloads,” reports Philipp Schulte, a member of the Management Board of G+D Mobile Security.  

To ensure devices in the IoT are connected in the most advanced and secure way, they need secure operating systems that run on the SIM cards. In the eSIM field in particular, more than 750 million G+D operating system licenses are now in use. The “e” stands for embedded and refers to SIM cards that are installed when a device is manufactured. This means our eSIM cards and the relevant services perform even better, are more robust, and – thanks to the use of less material and having a smaller logistics footprint – are 46 percent more environmentally friendly than plug-in SIM cards, measured over the product lifecycle. That is the finding of an independent study conducted by Fraunhofer IZM for G+D. The figure can likely be regarded as a minimum value, since the advantages grow with every virtual re-registration. 

G+D is the world’s leading provider of eSIM operating systems and eSIM activations (as performed via our data centers). In the automotive sector, eight of the ten leading automotive manufacturers trust the reliability of G+D’s solutions and connect vehicles to the Internet using our eSIMs. This provides the basis for telematics services and is an important component for autonomous driving in the future. Given this momentum, it is no surprise that G+D is heavily committed to researching further innovations. G+D recently launched a new digital twin of the physical SIM card. Known as the iSIM, it is already being deployed in a number of commercial projects. The “i” stands for integrated. Unlike with the SIM and eSIM, operating systems and security features are not stored on a dedicated chip. Instead, they are stored and executed in a secure enclave on another processor. The iSIM is a high-performing, tamper-resistant element that requires significantly less space, saves weight and materials, and reduces power consumption. All these factors help to cut the carbon footprint. In association with management services from our high-performance data centers, we believe our eSIM and iSIM solutions have the potential to further revolutionize the market for connected devices and technologies.

Young woman with a mobile in her hands

Digital identity on smartphones

Digital components are also important in the identity solutions market. Birth certificates, ID cards, and passports are essential for our lives and most people take them for granted. They enable access to government services, education, financial products, and mobility. However, the World Bank estimates that a billion people still do not have a unique legal identity. One of the United Nations’ Sustainable Development Goals therefore states that everyone should have a legal identity by 2030. Veridos, a joint venture between G+D and Bundesdruckerei, is a leading provider of identity solutions and is committed to helping achieve this UN goal. Veridos’s comprehensive portfolio includes reliable registration and verification systems, solutions for border controls, secure official documents such as passports and ID cards, and strategies for preventing identity theft. More than 100 of the nearly 200 countries in the world use Veridos solutions. 

Physical identity documents will remain commonplace in the future, with digital transformation continuing in parallel. In the EU, for example, it was agreed in 2014 that member states must give their citizens access to a digital identity (eIDAS initiative). Using digital wallets, users can manage their digital assets and data securely and conveniently and carry out transactions in the digital world. A variety of digital credentials can be stored in these wallets, including driver’s licenses, healthcare cards, and ID cards. The digital identity credentials that already exist today are not a carbon copy of their physical versions. They do, however, offer a range of advantages. For example, they can be updated much more easily, and quickly checked for authenticity using specific devices. There are many drivers behind this trend to digital. More and more people want to use online services but need to reliably prove their identity first. Digital identities are also increasingly being integrated into travel to enable coherent cooperation between the private and the public sector, such as through the use of digital ID documents and digital travel credentials (DTC).  

Digitalization also makes traveling and airport check-in much smoother. We implemented a corresponding solution at Luxembourg airport in 2022, which includes self-service kiosks for pre-registration and complies with the requirements of the EU’s new EES border control system (Entry/Exit System). Passengers from third countries can register in advance online and enter biometric information, enabling their documents to be verified quickly and securely at border crossing points for a seamless and pleasant travel experience. eGates, where travelers place their passports on a reader, likewise make the process more efficient. Veridos has already successfully implemented many automated border control solutions around the world. 

“Everyone benefits from the automation and digitalization of border controls. For border authorities, it means faster handling of passenger flows due to efficient and secure capturing and verification of biometric data. For their part, passengers no longer have to wait ages in line to have their passports manually checked and stamped,” says Marc-Julian Siewert, CEO of Veridos.

Visualisation of a globe with a virtual network

Critical data secure in the cloud

As digital interconnection gathers pace, cyber crime is also increasing. When businesses, hospitals, public authorities, military installations, or energy suppliers are impacted, the threat can become existential. Trade secrets, jobs, patient care, and energy security are at stake. The good news is that countermeasures are possible. “Countries and businesses can protect themselves effectively through highly secure digital infrastructure. However, this requires close and continuous analysis of threats, together with ongoing, appropriate investment and user-friendly applications,” summarizes Axel Deininger, CEO of secunet. 

Digital communication of sensitive data must meet strict security requirements. This applies in particular to public authorities, healthcare actors, and operators of critical infrastructures (CIs), such as energy suppliers. In security-sensitive areas like these, many elements of modern-day digital work practices – such as messenger services, working from home, and the cloud – used to be out of the question because they typically relied on services provided by international IT companies, thereby giving rise to privacy issues. Fortunately, this is no longer the case. For example, secunet makes remote working, i.e. working from home or other locations, feasible. The necessary foundation is provided by SINA (Secure Inter-Network Architecture), a high-security solution developed by secunet on behalf of the German Federal Office for Information Security (BSI). SINA enables sensitive or classified information to be processed, stored, and transmitted via the Internet. For many years, SINA has also been used to prevent phone tapping and protect video conferences. With useful additions such as stashcat messenger, users can do everything they are accustomed to doing on other messengers, but in a secure and trusted environment. With SINA Workflow, even information classified as secret has an end-to-end digital lifecycle. 

Highly secure connectivity now also extends to the cloud. Previously, this was often not an option for public authorities and CIs. secunet operates its own cloud platform, based on the successful open-source system OpenStack and enhanced with high-security technology. In 2022, secunet acquired cloud specialist SysEleven and now offers a sovereign cloud solution that is made in Germany. secunet is the only provider that can cover everything from self-hosted private cloud to trusted public cloud, including the necessary transformation advice. The cloud is the future of the digital world. In ten years’ time, our devices at work and at home will probably be very slim – all the data, apps, and functions will be located in the cloud. secunet makes the cloud extra secure for particularly vulnerable actors. 

In the Industrial Internet of Things (IIoT), security also plays a key role in secure connection of machines and industrial plants. Here again, secunet provides solutions that cover both strands of the digitalization trend: cloud computing and edge computing. 

Visualization of smart city

Helping to shape the future of tomorrow today

From payments and connectivity to protecting and managing identities and IT infrastructure, the future is all about digital transformation. G+D is committed to making the right decisions today for solutions that will deliver substantial added value for customers tomorrow and beyond – and also move the company forward. A passion for research and discovery, targeted acquisitions, and corporate venturing provide the necessary basis. “Just as outer space was an infinite expanse for the Starship Enterprise to discover, so we have virtually unlimited possibilities to explore completely new digital worlds with innovative technologies and deliver value for our customers and for us,” says an enthusiastic Michael Tagscherer, CTO of G+D. As such, G+D is continuing to write its own history: our strategy throughout the past 170 years has been to successfully bring new solutions to market by leveraging innovation. We are maintaining our technological lead and extending it through new digital solutions, business models, and additions to our portfolio.  

Expansion of software-based business models, with their attractive scalability, should provide an additional tailwind. New and exciting trends include Web 3.0 and the metaverse, where people will not only be able to communicate and consume (like in Web 2.0) but also actually own digital assets. These tokenized assets will be based on distributed ledger technology (DLT), with blockchain being the best-known form of DLT. The trustworthiness and secure management of data play a vital role here. G+D is also already addressing the cyber threats of the future. When quantum computers and artificial intelligence become commercially available, conventional security and cyber security solutions will no longer be enough. Accordingly, G+D is already working on the encryption methods of tomorrow (e.g. post-quantum cryptography). The digital identities of people, users, and machines is an overarching theme in this context, characterized by tight interlinking and mutual dependencies. 

G+D is harnessing this spirit of discovery and innovation in a strategic initiative. “When collaboratively developing innovations for G+D’s target markets, we explore how our core business can be expanded to take in additional growth opportunities with a focus on digital solutions and how we can enter completely new fields – new galaxies,” says Tagscherer. The new Innoverse initiative is opening up even more opportunities to create space for product and solution development and break free from conventional thinking. The digital solutions of the future will be developed and brought to market through collaboration and bringing together expertise from across all business units and by networking with the scientific community and startups. “G+D is aiming to double the size of its digital business as a proportion of total sales within three years,” says Jan Thyen.

For a leading technology company like G+D, innovation is a key factor. As such, our employees are a crucial element in G+D’s continued success. Their skills and commitment are vital for ensuring that our promise remains true into the future: G+D secures the essential values of the world through security technologies that create confidence.

Published: 05/04/2023

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