1

In this issue:

Industry 4.0, The Internet ofThings and Cash Management ­A Future of New Opportunities?

Upcoming ACMA Events ­ ACMAWorkshop at the Asia CashCycle Seminar in Yogyakarta

Korten på bordet ­ The UntoldStory Behind Sweden's Push forCashless

Cryptocurrency Insurance

1

4

5

6

As an inquiring member of the cashmanagement family with more than

my fair share of connections in researchand consulting I get to enjoy theexperience of being approached byresearch parties looking for informationon industry trends and initiatives. Thisyear it is clear that the concepts of theInternet of Things (IoT) and Industry 4.0have taken root in the generalconsciousness and furthermore that ourcash management sector is active inlooking at what these trends might meanfor us.

The Industry 4.0 analogy is a veryaccessible one, bringing a historicalperspective as well as clarity to thedefinition of what is now driving bigchanges in the world of commerce today.The introduction of technicaldevelopments in cyber connectivity anddata utilisation are causing businessleaders and innovators around the globeto reappraise their views on the value ofinformation and the methods in whichdata can be harvested and how valuecan be drawn from it. As retail giantTesco’s Chief Data Scientist, CliveHumby, is credited as saying back in2006, “data is the new oil”.

For anyone not aware of the Industry4.0 concept; the current phenomenon ofheightened data utilisation is placed asthe fourth in a series of technologicaladvancements made by humanity sincethe 18th century which have propelledmodern civilisation through the journeyof industrialisation. The previous threebeing the harnessing of power throughmechanisation (ie steam or waterpower), the development of massproduction techniques for massproduction and the invention of computertechnology and subsequent automation.

Each had fundamental impacts onhumanity, principally the advancement ofknowledge, capability and wealth.

Industry 4.0, the Internet ofThings and Cash Management ‐ Afuture of new opportunities?Anthony McAndrew

Continued on next page

Data has been as big a game­changer asthe invention of the first steam engine.

ACMA Currency Notes2

Connectivity or IoT is the reality of assetcontrol and understanding, on a mass scaleand with minimal effort. The upfront benefitsbegin with information capture and improvednetwork management, but the permutationsand consequential benefits are only limitedby our imaginations, so the theory goes.

For decades the exponents of Six Sigma,the manufacturing­originating discipline ofdata analysis as the source of continuousimprovement, have pointed to the value to begleaned from data generated fromproduction lines, test facilities and fieldperformance. The challenge has alwaysbeen in how to access the resulting benefitsin a cost­effective way through ManagementReporting without seeing a mushrooming inadministrative costs.

The development of data mining and theprocessing/analysing of that data (“datawarehousing”) over recent years hasadvanced what is practically feasible inturning acquired information into usableManagement Information, or effectivedecision­making analysis. With mostmachines now capable of producing data asan ever­present by­product, the potential toturn a perceived waste into something thatcan add value is alluring.

Most significantly the moderndevelopments in data handling and analyticshave now transformed the landscape in what

is possible with this data and with this, theefficacy of data management has advancedin tandem with the capacity to data mineenabling businesses to run their everydayactivities with data based decisions morethan ever before.

This is just as well, as the explosion indata generation is quite awe­inspiring. In thedecade between 2009 and today the volumeof electronic data in existence has increased44­fold, from 0.8 zettabytes to 35 zettabytes.Scary to think that a zettabyte is 1 billionterabytes, and contains the equivalentinformation as 85 newspapers for everyperson on the planet; however one tries toimagine it, it is a truly vast number and onethat is growing exponentially.

At this point I imagine you have at leasttwo questions; how do you extract meaningfrom this data in a commercial way and howcan this help in the cash managementsphere?

As said above, the value­add stage ofasset connectivity and other aspects of IoT iseffective data analytics and those operatingin this market define three key tools forharnessing “Big Data”; OLTP (on­linetransaction processing), OLAP (onlineanalytical planning) and RTAP (real­timeanalytics processing).

There are dozens, if not more, establishedproviders of these infrastructures (IaaS,

Continued from previous page

Today, the volume of electronicdata has increased to 35zettabytes. To put this intoperspective, a zettabyte is theamount of information equivalentto 85 newspapers for everyperson on earth.

In the fourth industrial revolution, digital analytics enables a new level of operational productivity.

Continued on next page

The challengehas always been in

how to accessthe resulting

benefitsin a cost­effective

waythrough

ManagementReporting

without seeinga mushrooming

inadministrative

costs.

Volume 1 | Issue 4 3

infrastructure as a service) andapplications (SaaS, software as aservice) to provide the necessaryexpertise to bring value to your business.Often requiring bespoke developmentwith the client, these providers open uppossibilities for revenue growth, costreduction and other benefits.

IMS Evolve are one such SaaSprovider to the cash managementindustry. Their EV platform monitors ATMstatus’ for a number of household namesin banking and transfers real­timemachine status data for 35,000 ATMs tomonitoring teams worldwide. Tellingly thesystem’s primary value is in capturingredundant information jettisoned by othervendors and using it to determine moreaccurate and quicker responses fromservice maintenance teams.

According to George Porter, Head ofEvolve Productivity, where EV has beenintroduced machine fault­to­fix times for“second line maintenance” calls hasreduced by an average of 5 hours perincident. Maintenance operations usingEV have reported increased productivityof their engineers of over 100%, enablingsavings of 20%+ in expenditure.Needless to say, the impact on machineuptime has been significant.

This example highlights one of theironies of this emerging industry; that inmany cases the all­important andvaluable data already exists. The key toadding value has been to challenge theexisting paradigms of what availableinformation might be useful for and thenworking with the data warehousingindustry to work out how to collect, filterand trend it is a format for the user’sdecision­making.

What is also illustrated by the EVexample is the capacity for applicationpartners such as IMS to drive serviceenhancement and cost reduction forbusiness, driving real value fromavailable data. However the area ofgreatest interest for most business

leaders is probably revenue growth, andtherefore the data management industryis very focused on their productdevelopment in this area.

Marketing and advertising are front­of­mind for B2C businesses and we can allrelate to how Facebook, Lazada, Amazonand others have sophisticated models forextracting data from their businesses andusing it to drive sales and other revenuestreams. For B2B sectors, potentialrevenue benefits come in different ways.

In the Logistics industry the prospectof using real­time data combined withdynamic planning capabilities is openingup opportunities throughout the market.Anyone who has ordered an Uber knowsthat the service price varies according todemand at the time and serviceavailability. This concept is equallyutilised by Amazon and any number ofdespatch services from DHL to Tesco on­line. As a result revenue growth ispossible beyond the levels achieved withstandard pricing structures.

A second revenue growth opportunitydepends on connecting CIT crews to thebusiness’ network in real time throughsimple user interface apps. Through thistechnology CIT crews are able tofeedback data on customer behavioursthat cause service delays, service creep(where ad hoc requests are added to theservice) or other chargeable items can be

effectively caught and presented to thebilling team in a timely manner. Dataanalytics and back­end MI generationcan ensure trends are picked up andcorrective actions through contractchanges or operational adjustments helpdrive the business forwards.

Opportunities for cash centre businessare also numerous. Most operatorsrecognise the vast amount of dataalready generated through the dailyreconciliation process; cash stock levels,ATM return values and deposit sizes.However in many organisations this datais rarely analysed beyond the needs ofreconciliation, and even less frequently isit presented in real­time and todepartments outside of the accountingfunctions.

With the emergence of RTAPcapability, decision­making informationcan be extracted and made available tomanagement quickly enough for plans inresource and service delivery to beadjusted accordingly. Where centralbanks have implemented fund transfermechanisms into the sector, thistechnology can cut hours or days fromthe existing, correspondent­basedprocesses, presenting the banks theopportunity to take value out of their “on­book” floats.

Continued from previous page

The availability of real­time data permits greater flexbility and dynamism, opening upopportunities for revenue growth.

Continued on next page

ACMA Currency Notes4

UPCOMING ACMA Events

ACMA WORKSHOPAT THE ASIA CASH CYCLE SEMINAR IN YOGYARKATA 4­6 SEP 2018

Fees: US$250 per person (50% discount for ACMA members)See http://asia.iccos.com/workshops for more info.

PART I: Future of CashCash is presently the main form of payment globally,

except for Scandinavia, and cash in circulation continues togrow globally at 5% year on year. This is even more so inmany parts of Asia and Africa, where high single­digit anddouble­digit growth rates are common.

However, digital payment methods are fast becomingmore popular although more expensive per transaction inmany cases when compared to cash.

In Sweden, there is concern that if cash was to beremoved altogether, there would be no counter balance tothe cost of digital payments.

The ACMA Workshop will explore per country basis Cashvs Digital payments, the impact digital payments will have onfuture cash payments and how the type of paymentsemployed are linked to GDP, population mean age,percentage of unbanked population and average wage. It willalso discuss legislation or regulation in the cash cycle and itsimpact on the commercial cash operations.

PART II: Attacks/Fraud and Risk MitigationAttacks against businesses that process and move cash

and valuables is an ever­present risk from both internal andexternal losses.

The Workshop will explore the types of attacksexperienced by each country represented by ACMAmembers and compare them to the loses experienced byEuropean businesses where criminals or criminal gangs aremore sophisticated and organised.

Mitigation is vital in reducing the known risks andanticipating future risks. This requires a clear understandingof the markets we operate in through a detailed riskassessment which in turn drives the measures required tomitigate the risks or future risks and will identify theinvestment needed to protect the assets and personnelunder our protection.

Insurance is a key component, but does not remove theprofessional obligations that we as an industry need to put inplace to protect all the assets in our control.

The development of these newcapabilities has a further benefit, as it canprovide material for new propositions tobe forged with the region’s regulators,providing concrete evidence of the valuesof currency management outsourcing andthe decentralisation of traditional centralbank activities.

Perhaps this is one of the greatestopportunities presented by these newtechnologies for our industry; that theycreate the context and demand for newservices and products from the bankingindustry, thereby ensuring our relevanceis regenerated in line with customerexpectations for future years.

It seems more and more clear that weare on the cusp of another technological

leap forward in the history of industrialman with Industry 4.0. The question foreveryone is, how do we extract value fromthe new fuel that lies behind it – data.

Anthony McAndrew is the Principal Director ofAstute Outcome Asia Sdn Bhd., a Malaysiancompany focused on using emergingtechnologies to bring value to the industry.

Continued from previous page

5Volume 1 | Issue 4

KORTEN PÅ BORDET ‐ THE UNTOLD STORYBEHIND SWEDEN'S PUSH FOR CASHLESSTan Jit Kent

To most non­natives, the mention ofSweden often conjures up several

thoughts: meatballs, affordable homefurnishings, and ABBA, to name a few. Themonetarily inclined may also know of Swedenas one of the leading pioneers in a cashlesseconomy, with the country’s current trajectorytowards total cashlessness often describedas a successful model for both cutting costsand reducing crime. While this may possiblybe true, it isn’t quite the complete story,according to Björn Eriksson at least. In his2014 white paper Korten på bordet, Erikssondissects this issue in detail – identifying themain stakeholders driving the cashlessmovement, questioning the narratives theyhave put forth, and discussing what may betheir actual reasons for pushing the cashlessagenda. Eriksson’s paper also discusses thevulnerable groups who stand to lose out in asociety totally devoid of physical money –and according to him, this includes virtuallyeveryone.

The cashless lobby in Sweden is ledmainly by three major commercial banks,together with bank­owned credit cardcompanies. The arguments put forth for thisshift range from environmentalism and publichealth, to crime prevention, to cost reduction.In his paper, Eriksson has deconstructedthese arguments and refuted them with hisown thoughts and findings. He points out thatcash generates virtually no return for banks,whereas digital money does. Very much so.And that’s where the logic lies. Credit cards

are already highly profitable for banks, andthey stand to make even more profit if cashwere to disappear entirely. With cash out ofthe picture, bank­controlled digitaltransactions would become the only meansof payment. The banks would effectively havefree reign, with near­absolute discretion toimpose new fees and various controls fordigital transactions. Consumers meanwhilewould be at their mercy, having to acceptpotentially unfair terms in the absence ofalternative payment methods. Eriksson thushighlights cash as the sole safeguard againstsuch abuse of power by commercial banksand credit card companies.

The importance of cash isn’t limited to thatalone though, as Eriksson elaborates furtherin his paper. He provides four arguments forretaining cash as a payment option.

Firstly, cash provides its users with privacyand independence which cannot be renderedby digital payments. Digital payment serviceproviders have demonstrated that they areable to authorise or block transactions tobusinesses which they deem immoral.Eriksson draws two conclusions from this:primarily, that businesses and consumersalike are at the mercy of payment serviceproviders; and secondly, the more insidiousnotion that these companies monitor andrecord each and every attempted purchasefrom each and every customer.

Secondly, cash provides a level ofinclusion that digital payments have not yetachieved. For instance, immigrants,individuals with debt, and former criminalsmay not be part of the banking system.Eliminating cash would make their alreadydifficult living situations considerably worse.

Eriksson’s third argument is perhaps anextension of his second one oninclusiveness: small businesses and ruralcommunities simply can’t do without cash.The limited scale of small retailers’ operationsoften precludes usage of card payment

With cash outof the picture,

bank­controlleddigital transactions

would becomethe onlymeans

of payment.

Cash is a very important resourcefor remote rural communities inSweden who are not yetequipped to go fully cashless.

Cash is an important bargaining chip inmaintaining the balance of power betweenbanks and consumers. Continued on next page

ACMA Currency Notes6

Despite wildly fluctuating values, the rapidgrowth of the cryptocurrency market

continues with an estimated 6 million peopleworldwide now owning cryptocurrencies. Thishas led to established security companiesand financial institutions starting to enter themarket.

This rapid rise in ownership has beenmirrored by a huge increase in the amount ofhacks and thefts from online platforms. Themost famous case was in 2014 when the Mt.Gox Bitcoin exchange was hacked, losing850,000 Bitcoins but stories of on­lineexchanges and individuals losing theirholdings continue today.

The response from investors to this threathas been to move a significant portion of theircryptocurrency assets off­line by storing theprivate keys to a Bitcoin address either onpaper, a hardware “wallet” (similar to a USBdevice) or on an “airgap” computer (one withno internet connection).

The ultimate secure solution being offeredby the exchanges, security companies and

dedicated cryptocurrency custodians is tosplit the private keys into several parts andput them into “cold storage”. The wallets orcomputers containing each part of the codeare then stored in separate secure vaults,often thousands of miles apart.

CoverageJLT has been working with specialist

markets, predominantly in Lloyd’s of London,who can provide coverage for the physical

The responsefrom investorsto this threat

has beento move

a significant portionof their

cryptocurrencyassets

off­line...

The English language translationof Korten på bordet.

Continued on next page

machines. At the same time, they may belocated in remote areas with no Internetconnectivity. Going completely cashlesswould thus force such businesses to eithermove or shut down, resulting in ruralmunicipalities experiencing furtherdeteriorating services and greater emigrationthan ever before.

Finally, Eriksson argues that cash isvaluable for its simple robustness. Digitalpayments are presently still vulnerable tomalfunctions, hacking, and power outages. InSweden, he says, power cuts are common.Having cash as a stable backup would go along way towards mitigating the ensuingchaos in the event that digital payment isrendered unusable by some disruption orother.

Korten på bordet wraps up by concluding

that banks have a clear vested interest ineliminating cash as a payment method. And itis this which fuels their fierce lobbies to theSwedish government. With so much at stakefor everyone, Sweden’s electedrepresentatives are faced with an importantdecision. And it is one which must be madewith the wellbeing of Sweden’s citizens inmind, rather than that of its banks.

Continued from previous page

Korten på bordet (translated as “Cards on theTable”) is a white paper written by BjörnEriksson to draw attention to the strong lobbyagainst cash, and its wider implications. Thepaper has been translated into English courtesyof Currency Research and this translation isavailable in its entirety here.

Björn Eriksson is extensively experienced in avariety of security organisations and areas. Heis currently Head of Säkerhetsbranschen, alobbying group for the Swedish securityindustry, and has recently been elected asChairman of the National Sports Confederationin Sweden.

Cryptocurrency InsuranceDominic Watson

With more people worldwide beginning to takeup cryptocurrency, hacks targeting theirplatforms have also grown more frequent.

7Volume 1 | Issue 4

ACMA CURRENCY NOTES is a quarterly industrynewsletter read by over 4000 professionals in the cashhandling industry globally.Advertise with us to increase your presence across Asia,Africa, and Austraila & Oceania.

Members pay$400 for a full­page advertisement;$200 for a half page; and$100 for a quarter page.

Non­members pay double.

Send enquiries to Tan Chee Meng at: tancmsia@gmail.com

About ACMAMissionTo provide a platform for Cash ManagementCompanies (CMCs) in Asia, Africa and Australia &Oceania to raise their professional reputation andstanding in the Cash Handling and CashManagement Industry, and to act as a representativewith the appropriate authorities on issues of commoninterest.

Founding MembersAB Securitas Phiroze Kevin PestonjeeCurrency Research Richard HaycockLinfox Armaguard Scott ForsterSpearpoint Group Ted Devereux

Office BearersChairman Óscar Esteban, ProsegurExecutive Director Ted Devereux, Spearpoint

GroupSecretary Tan Chee Meng, Currency

Research

Committee MembersAbdul Malek Bin Sutan, Meps Currency ManagementScott Forster, Linfox ArmaguardHuseyin Memis, Streamcorp ArmouredBaskaran Narayanan, Brink'sPhiroze Kevin Pestonjee, AB SecuritasCharles Wink, G4S

www.acma­asia.org

To become a member, write to Tan Chee Meng at:tancmsia@gmail.com

share your insightS

If you would like to havean article published inthe ACMA CurrencyNotes, please write to TanChee Meng at:tancmsia@gmail.com

Contributors to this issue:

Anthony McAndrewTan Jit KentDominic Watson

loss or damage to cryptocurrency private keys resulting in either (i)the cryptocurrency becoming unrecoverable or (ii) an unauthorisedtransfer of cryptocurrency to a third party.

This product is offered by a limited number of Insurers currentlybut limits in excess of USD $500,000,000 are available.

DemandWe have recently seen a strong increase in enquiries about this

product as cryptocurrencies become more mainstream. Asdemand increases, we are seeing growing capacity andcompetition from the insurance market.

Clients are looking for cover so they can offer an insured serviceto their customers.

Information Required to Obtain a QuoteUsually a dialogue is required with Insurers in order for them to

gain a full understanding of individual risks but key information is:­• Background and experience of Insured• Regulatory control and licenses held• Financial crime risk controls ­ anti­money laundering, sanctions,bribery & corruption etc.

• Details of key/wallet creation and cryptocurrency depositprocedures

• Details of crptocurrency withdrawal procedures• Physical security of your premises

Continued from previous page

For further information, please contact Dominic Watson, at JLT.