Stay tuned with CashEssentials news ! - beyond payments
By subscribing, you accept our Privacy Policy.

The Future of Cash – from an Asian Perspective

Categories : Future of Cash
October 11, 2021
Tags : Asia, Cash paradox, CashTech, Future of Cash
The recent Future of Cash online event focused on the Asia-Pacific region. It showed how some of the traditional roles of cash have been significantly impacted by the pandemic and looked into how central banks and other cash cycle stakeholders are planning plausible scenarios for the future of cash.
Paul Blond

Managing Partner, The Blond Group

This post is also available in: Spanish

In place of the annual in-person Future of Cash Conference, a series of highly virtual events have been staged.  The most recent was an Asia-Pacific-focused two-day virtual conference held across four themed sessions in July.  A great line-up of industry experts presented a range of insights and updates before sharing the panel to answer delegate questions.  I was fortunate to join Conference Chair Guillaume Lepecq in moderating these panel discussions

Session One kicked off with three distinguished central bank panellists: Antti Heinonen, former Director, Banknotes at the European Central Bank and current Chair of the Banknote Ethics Initiative; Alex Bau, Director, Data and Policy Analysis at the Federal Reserve System Cash Product Office in San Francisco; and Ralph Meris, Deputy Director of the Bangko Sentral ng Pilipinas (BSP). The three were able to provide data rich updates on cash trends across Europe, the US and the Philippines/Southeast Asia.

The Cash Paradox 

A common and recurring theme – referenced several times during the conference – was the ‘Cash Paradox’, namely the disconnect between significant growth in currency put into circulation and the sometime steep decline in cash use during the height of the COVID 19 pandemic.  This paradox emphasises the role of cash, not only as a means of payment, but importantly as a store of wealth, especially in these troubled times.

Panellists were keen to point out that while cash payments were down, with lockdown, domestic and international movement restricting economic activity, so too were many other forms of payment use. Questions were asked about whether moves towards contactless transactions, encouragement to use cards and apps for payments and, in some instances, active discouragement in the use of cash (based upon now disproven health grounds), was a permanent shift change in payment behaviour or a temporary response to the pandemic.

I think the jury is still out on that, and when currency in circulation volumes and trends return to more established norms, this will no doubt be a topic for further discussion at the upcoming Future of Cash events.

As well as the global trends, we also heard an in-depth description of the BSP’s Cash Service Alliance initiative moving considerable cash handling activity from the BSP to a number of commercial banks, with consequent supply chain efficiency gains. Expedited by the pandemic and restrictions on movement, it reinforced that there are still many efficiency opportunities to ensure the costs of handling cash are maintained.

The Importance of Sustainability

Indeed, the importance of a sustainable cash infrastructure if only as a backup to other not always reliable payment forms was another area of significant debate.  The question was asked ‘if cash is only really needed as a precautionary store of wealth; will the private sector have any need or interest to support it? Do central banks need to intervene and underwrite cash to ensure its future?’

In the second session we continued to draw experiences during the pandemic, considered lessons learned and optimistically looked to the future. Four panellists – Petteri Lilberg, futures literacy experts at tank Demos Helsinki; Ian Woolford, Head of Money and Cash at the Reserve Bank of New Zealand, Te Pūtea Matua; and academics Franz Seitz from Weiden Technical University of Applied Sciences and Gerhard Rösl of Ostbayerische Hochschule Regensburg – shared the stage.

Plausible Future Scenarios

Petteri´s presentation provided a systematic framework for considering a plausible future for cash drawing on the competing needs of Inclusion, Privacy and Sustainability.  We walked through three scenarios – Global Recovery, Return of the State and Let’s Get Digital – and considered the role of and impact on cash in each case.

Spanning the globe from Helsinki to Auckland, we heard from Ian Woolford on cash stewardship and a number of specific initiatives, including the planned fundamental redesign of New Zealand’s cash system ensuring it is fit for future purpose.  Ian outlined the RBNZ’s plan to issue three consultation papers on Money and Cash Stewardship, Central Bank Digital Currencies and, later, Cash System Redesign.  We look forward to learning more about these soon.

Professors Seitz and Rösl talked to their recent paper ‘Cash and Crises’, referencing the cash paradox and concluding that in times of crises (of all types) cash demand grows.  Their analysis exposed differences in denominational demand but concluded that cash remains both an insurance device and safe haven.

Different Cash Cycle Models

Day Two started with a session entitled the ‘Next Gen Cash Cycle.’  Our panellists were Hiroshi Fujiki of Chuo University in Japan; Jodie Leetet, Value Stream Lead at Australian commercial bank ANZ; V Balasubramanian, at Indian cash logistics company FSS CashTech; and Ben Thorpe, President, APAC, GLORY Global Solutions.   Each speaker drilled down into their specific fields of expertise and shared some fascinating insights into the potential future direction for cash.

Prof Fujiki spoke to his study of consumer payment behaviour in response to a decline in bank operated ATMs in Metro Tokyo, reporting on which consumers sought out other ATM locations of their own bank, used third party or other ATMs, or moved to non-cash payment methods. The trends were correlated to consumer financial literacy and provided some important lessons surrounding consumer education and inclusion as banks seek to rationalise infrastructure and reduce costs.

Jodie Leetet described Australia as a ‘cash light’ country, referring to the growth in non-cash payment choices, largely contactless transactions.  She concluded that ‘there is still much public good in being good with cash’ and that ‘no one banking institution can and will hold the answer as both customers and banks exit the physical branch and ATM model.’

By contrast the next speaker, V Balasubramanian, put up a strong defence for cash in India, trumpeting the much-used adage that ‘cash is king.’  Bala explained how cash is intrinsic to Indian life and an important safeguard against insecurity and shortages.  He emphasised the importance of offering both cash out and cash in – access and acceptance – across the many thousands of villages and towns in India, and how cash and ATM provision are a catalyst to financial inclusion and digital adoption.

Ben Thorpe at Glory took us on a cash history lesson, culminating in his company’s vision for Cash 4.0, and opportunities to embrace technology to make the cash cycle more efficient and cost effective and how the cash industry remains ripe for disruption.

CashTech to the Fore

Ben’s presentation was a perfect introduction to our fourth and final session on CashTech, the term being used to describe a range of emerging technology led solutions that are bringing fresh thinking to the cash arena (see page 12).  Our panel of cash entrepreneurs included Huseyin Memis, Chief Commercial Officer, at Shrap; Hari Sivan, Founder and CEO of SoCash based in Singapore;  and Ollie Walsh, Co-founder and CEO of the international cash transaction platform Pipit Global.

Huseyin introduced us to Shrap, coins reimagining, and a digital alternative to issuing and handling coin. He described the Shrap app to store loose change as a convenient alternative to pockets or jars full of heavy metal and talked to the company’s involvement in a number of UK based trials supporting access to cash.  As a long-standing cash logistics industry expert, he also talked to some of the high costs of coin handling and the opportunities to reduce coin at the point of sale.

Hari Sivan expanded on the work of So Cash, first introduced in Ben Thorpe’s presentation, and how his company’s app to match customer cash needs with retailer surplus cash has created the largest cash access network across Singapore at a time where traditional bank branches and ATMs are contracting. Another example of digital technology being used to support rather than fight against cash use.

Finally, Ollie Walsh provided a fascinating insight into his Irish Fintech company Pipit Global – a for profit, social impact B2B platform that provides a cost-effective way of enabling often unbanked migrant workers to remit payments home.  Pipit offers a solution to counter the high cost of cross border payments, again showing how cash can be an intrinsic part of a digital landscape and enabler to greater financial inclusion.

At the end of two days of expert opinion and shared insights I was struck by how some of the traditional roles for cash have been significantly impacted by the pandemic but heartened by the Cash Tech and other opportunities to drive improved efficiency and lower costs across the industry.

In many ways the conference raised more questions than answers and started conversations that are yet to play out.  As such, it provided the perfect springboard for continuing the Future of Cash debate.

Next Future of Cash Events

The in-person Future of Cash event planned for 10-11 November in Madrid has been postponed until 13-15 September 2022, in anticipation of travel restrictions finally being lifted by then.

In the meantime, a series of virtual events and roundtable sessions are planned over the coming months. They include a two-day webinar entitled Cash & CBDCs  on 11-12 November.


This post is also available in: Spanish