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Overcoming Inefficiencies in Cash

18 March 2016

Graham Levinsohn, Regional CEO of G4S, offers his views on the state of cash in Europe - in advance of his presentation at The Future of Cash.

He will be presenting the findings of a major new study by the company into the relevant cash cycles in 28 countries on Tuesday 12 April.


Is there a trend away from cash as a payment mechanism?

If you look at what is being written in much of the financial press at the moment, there is an assumption that cash is in terminal decline. However, our own research shows that the picture is much more complex.

Across Europe the amount of cash withdrawn from ATMs continues to increase, but it is also true that cash as a percentage of the overall payments landscape is slowly decreasing.

Cash remains the predominant payment method across Europe, with 60% of transactions still conducted in cash.

 

Do you expect the European Central Bank’s (ECB) decision on negative interest rates to influence cash volumes?

Negative rates are an attempt by the ECB to push commercial banks towards lending more money to businesses and consumers. They also have implications for cash volumes.

If we look at Sweden and Switzerland, as policy rates turned negative the amount of currency in circulation appears to have risen. Some commentators suggested banks might have locked away cash in strong boxes to hide it from negative interest-rate accounts – that doesn’t appear to have happened. I think we can expect a slight upswing in cash circulation with the ECB’s recent announcement.

 

What factors influence cash use?

There are a range of other factors which influence cash use from economic growth through to e-commerce rates in countries. They are multifaceted and complex. What we do know is that cash has a series of unique attributes based on consumer preference. Chief amongst them is that cash is trusted given its status as legal tender. Cash is easily accessible and tangible, it retains anonymity and offers a direct settlement.

 

Is cash – as a payment mechanism – too inefficient?

Our approach, for a number of years, has been to address the chronic inefficiencies in the cash cycle. What has become more apparent with the evolution in cash use over the past few years is that the cash cycle needs root and branch reform.

The cash supply chain is highly fragmented across Europe which creates chronic inefficiency. In most extreme cases throughout the cash cycle, cash can be counted up to 17 times. That just doesn’t work for business and it doesn’t work for banks. We have the opportunity to modernise cash use in Europe to drastically reduce these inefficiencies. 

 

What should businesses be doing to make cash work better for them?

The industry needs to take steps to modernise cash. The only way this can be achieved is by shortening the cash cycle and minimising inefficiencies. This can be done by extending the Europe’s cash infrastructure and better integrating it. Through a secure and integrated cash cycle, the cash-to-bank journey is shortened. It then becomes possible to generate immediate value for deposited cash, leading to better banking and efficiency savings for businesses.
 

 


 

Learn More At The Future of Cash

Graham Levinsohn will be presenting results of the G4S Cash Report Europe on Tuesday 12 April during The Evolution of Cash Cycle Models session at The Future of Cash.

 

Other presentations in this session include:

The Impact of The Reduction of Commercial Banks' Footprint on the Norwegian Cash Cycle
Leif Veggum, Norges Bank

Modernising the Currency: What the Future Holds for Cash Supply Chains
David Hensley, Cash Services UK

Roadmap Towards a More Efficient Cash Cycle in France
François Coulet, French Banking Federation

Cash and Personality Types
Sébastien Chapoulet, Glory Global Solutions

 

More Event Details