The cash industry is in a state of flux. While electronic means of payment have disrupted the cash landscape, the volume of cash transactions continues to rise. Today 85% of all transactions are made with cash. But there is no doubt cash operations have been disrupted, and central banks are now focusing more on one of their biggest challenges: forecasting future demand for cash.
On hand is one of the world largest commercial banknote services providers, De La Rue. With a customer base of over 140 issuing authorities worldwide, De La Rue has provided cash services for more than 200 years. It employs over 2,500 people across four continents. But, like the industry, it has had to evolve.
In 2012, De La Rue launched its new service DLR Analytics – a tool to utilise cashflow data to help central banks get the most out of the currency lifecycle. A core component of the software allows central banks to track banknotes as they move through the economy, working out its lifespan and, subsequently, the demand for cash.
De La Rue’s focus was to provide central banks with a standardised approach to cash‑cycle data analysis. Historically, this has been a problem as central banks use differing processes, making global comparisons near impossible. More than 70 central banks are now signed up to use the service, which allows them to make informed decisions about substrate choice and when to order new stocks of specific denominations.
To ensure the platform’s smooth functioning, De La Rue has deployed a team of statisticians that collects and anonymises the data provided to the DLR Analytics service by central banks or government agencies, so users can securely see their own data compared to global or regional data. This means issuing authorities that might be considering a change of requirement can look at what previously happened when similar changes were made elsewhere.
De La Rue has striven to ensure central banks’ data is secured within the system. DLR Analytics is encrypted with a series of regularly updated cyber walls. The service also comes with a forecasting toolkit, which allows central banks to better predict banknote demand. The tool uses information from open data sources to provide forecast models.
Since May 2017, the service has been available via a web interface, built in‑house by De La Rue and which includes monthly webinars and an online user group. Subscribers can still access De La Rue consultants for specific support, but the vast majority of questions are now answered in a ‘self‑service’ manner by accessing the software.
The success of the tool is evident from changes central banks have made following its use: tweaks to ensure the cash cycle is efficient, while helping the community move towards a common language and methodology.