Enabling Digital Transformation in the Cash Management Ecosystem of India

India is predominantly a cash-intensive economy, with nearly 90% of all transactions being cash-based. (Source: Economic Times, Feb 2018). Reserve money data released by the RBI in May 2018 shows that the value of currency in circulation amounts to Rs. 19 lakh crore. The high cash circulation poses serious concerns to the economy such as the growth of black money that deprives the government of tax revenues to spend on public services. In an attempt to curb black money and corruption, and prevent counterfeiting of currency notes, the Govt. of India announced the demonetisation move in November 2016 – aimed at steering the country towards a cashless economy. While the exercise resulted in accelerating a shift towards digital payments – driven primarily by a cash shortage in the months following demonetisation, the trend seems to have reversed with consumers and businesses increasingly opting for cash transactions as liquidity improves in the market. The Indian payments industry today is largely dominated by cash-based transactions in sectors like retail, microfinance, chit funds, restaurants, and taxi services, among many others. Cash management, therefore, stands as one of the key service deliverables for the banking industry in India.

The Cash Management Ecosystem in India comprises multiple stakeholders that include the RBI, Central Banks, State & Private Banks, ATM Equipment Manufacturers, Managed Service Providers (MSPs), Cash Replenishment Agencies (CRAs), Market Vehicles and Insurance Companies. Each of these stakeholders serve as touch points for smooth cash flow in the economy. With the RBI as the governing authority, the banks are the pivotal orchestrators for cash management in the country. They carry the responsibilities of cash bundling, labelling, packing currency, reconciliation of collected cash, cash delivery, real-time MIS reports for replenished and idle cash, cash forecasting, inter-branch movement of cash and cash processing at currency chests. The printing of currencies is a function of the RBI, and these currencies are circulated to all banks via Central Banks. State and Private Banks carry major responsibilities in the cash management cycle including forecasting, borrowing from RBI, processing, delivery and remittance. MSPs are responsible for managing cash that needs to be circulated from banks to various remittance points. CRAs work under the guidance of banks, either through the MSPs or independently to replenish cash at ATMs from their cash vaults in a timely manner. It is the responsibility of the CRAs to ensure cash availability at demarcated ATM machines at any given point of time. Insurance bodies affiliated with the CRAs provide the required insurance cover to cash vans through which currency is moved to the remittance points.

In India, ATMs serve as key cash remittance points. There are over 2 lakh ATMs spread across the country, and it is estimated that the number of financial transactions in a month – mostly cash withdrawals, is close to 700 million. Broadly, ATMs are identified as white-label (owned and operated by non-bank entities, with a sponsor bank providing the cash) or brown-label (ATM hardware owned by a service provider, but cash management and network connectivity is provided by a sponsor bank). Given the country’s large dependence on ATMs as cash remittance points, it is imperative that the cash flow to both brown-label and white-label ATMs dotted across the length and breadth of the country, need to be meticulously planned and executed. The CRAs are responsible for this function. At present, over 8,000 cash vans from registered cash logistics companies carry approximately Rs. 15,000 crore of cash everyday, making security in transit/storage a critical consideration for the cash management industry, and CRAs in particular.

With the rampant increase in cases of cash van abductions and thefts over the years in India, it has become critical for CRAs to focus on creating a safe environment for movement of cash from the vaults to their destined ATMs. In the light of these attacks and thefts, insurance premiums have been on the rise. CRAs also incur high costs of operations (fuel, fleet maintenance, drivers, crew, gun men, etc.) and are required to manage a fleet of varied vehicle categories – Owned/Market/Leased.

Rane t4u Private Limited, a pioneer organization that designs and powers value ecosystems for the real world and enables digital transformation of businesses through the Internet of Things (IoT), has developed a comprehensive cash logistics management solution which is integrated into the CRAs operational ecosystem to effectively monitor and manage all their operational processes and assets (cash vans) on a single platform in real time, that can be accessed from anywhere in the world. Through this solution, CRAs will be able to ensure maximum security and safety of cash in transit, while also achieving efficiency in operations through improved decision-making. To secure cash vans from any external or internal safety threats posed during the movement of cash for their clients, Rane t4u has developed an IoT-based High-Security Cash-In-Transit solution – DriveFort. This solution empowers CRAs to equip cash vans with safety firewalls, and also provides the necessary regulatory compliances mandated by insurance companies against the assets insured. DriveFort includes state-of-the-art technologies such as a Tamperproof Locator which provides vehicle location even if the GPS/GPRS system has been tampered with, a panic alert button to notify the command center in case of any emergency, a Smart Remote Immobilizer to bring the cash van to a halt from anywhere, and a Remote Wise Lock that provides secure control of the cash van door locking/unlocking system. The solution also captures vehicle diagnostics for predicative maintenance and location sensing.

While for the Cash Management Ecosystem in India, Rane t4u proposes a complete IoT-enabled technology platform solution that seamlessly integrates all the stakeholders involved in the cash management cycle, creating a digital ecosystem binding all banks, MSPs, CRAs, insurance bodies and market vehicles together, with banks being the principle stakeholder. In the conventional linear approach, all the stakeholders are treated as different segments and solutions sold to them in silos. Via Rane t4u’s ecosystems approach, technology connects all stakeholders in the cash management cycle in a shared-view environment, enabling real-time communication and providing access to decision-making data. This cash management ecosystem solution would provide complete operational insights and visibility of cash movement within the ecosystem through real-time information and data analytics, thereby enabling digital transformation in the cash management industry.

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