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The Cash Agenda for 2020

Categories : Cash is efficient
February 12, 2020
Published in : Cas mangement company, Commercial bank, South Africa, utility
Pieter Steyn from SBV, South Africa's bank-owned cash management utility, discusses the challenges for 2019 and the priorities for 2020.
Pieter Steyn

Currency New asked a cross-section of cash experts from different parts of the cash cycle (and the world) to consider the challenges of 2019 and the priorities for 2020, with each facing the implications and realities of changing usage. Here is the interview with Pieter Steyn from SBV. This article was first published in Currency News Volume 18 – n° 1 January 2020.  

SBV will be presenting at the next Future of Cash Conference in Madrid.  

 

SBV is South Africa’s primary CIT company and is owned by Absa Group, First National Bank, the Standard Bank of South Africa and Nedbank. It is the only company in South Africa that partners with the South African Reserve Bank (SARB) to collect all new banknotes and coins for distribution.

South Africa has a major problem with violent CIT crime, and the most pressing change in 2019 was to address increasing CIT crime using explosives to gain access to security trucks. SBV has done considerable work in the past to counter CIT crime and this is reflected in it being the target of only about 4% of South Africa’s CIT attacks.

The latest developed technology to counter explosives is now being fitted to five vehicles with a further 100 to be rolled out soon. Once this breakthrough technology has been proven, SBV is envisaging commercialising this innovation internationally to make it available to others.

From a commercial model to a utility model

2019 saw SBV changing its commercial model. It has moved from having a commercial shareholder to an industry ‘utility model’ with only banks as shareholders. The benefit of this is to increase industry co-operation and enable new ways of working.

The banks regard SBV as a ‘national asset’ rather than a commercial player since 95% of its income derives from its bank customers rather than retailers. Its status as a utility gives comfort to the banks in terms of sustainability and strategic input, which they deem key;

SBV previously served the four largest banks but with this change, it now serves the banking industry with more than 20 participants. The costs of ‘industry essential’ services such as storage and CIT movements are split on a usage basis.

With this change of approach, in 2020 SBV wants to attract more cash players, and their related volumes, into its existing footprint in order to lower unit costs. At the end of 2019 SBV already had three major banks ‘fully in’ as customers and is targeting two more large banks in the short to medium term.

Violent CIT crime remains a major challenge

Violent CIT crime remains a major challenge and SBV will focus on this risk even further, launching its innovative approach as a product alongside various other tactical interventions.

Finally, 2020 will see a major data drive with the aim of getting to a single version of the truth, simplifying IT platforms and building client engagement portals.

With regard to future cash challenges, a 2020 priority is agreeing the strategy for the next five years. A major part of this is anticipating and reacting to the risk of retailer and fintech disintermediation. As about 95% of SBV’s revenue is linked to banks, any reduction in cash volumes will have a major impact.

SBV is expecting to see the effect of cash-back at tills and QR codes on ATMs reducing bank branch volumes. Although high inflation keeps cash volumes up, and SBV aims to increase its market share, it has to plan now for a changing world. It does not see a cash-less world, but definitely a less-cash world.

SBV is actively engaging with stakeholders as part of preparing this strategy, such as SARB, Bankserv (South Africa’s automated clearing house), its shareholder banks, customers and the wider banking community, suppliers and fintech companies.

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