South African Reserve Bank: Cash Industry Data Visibility

01/01/2024

South African Reserve Bank (SARB)

One of the South African Reserve Bank’s (SARB’s) strategic focus areas is to ensure the availability and integrity of banknotes and coins to meet public demand and to continue to be respected in its role as a world-class currency management authority. To deliver enhanced insight for decision making, SARB’s Currency Management Division seeks to ensure that holistic datasets required for analytical purposes are collected and analysed in manner that is efficiently, streamlined, and automated to reduce the risk of data fragmentation. The SARB transacts with Cash-in-Transit companies, who act on behalf of major Banks for currency orders and deposits.

This initiative was intended to improve visibility and data sharing between these Cash Cycle participants within the following subject areas: Currency Processing, Currency Inventory, Currency Yields, Client Currency Deposits, Currency Withdrawals, Processing Machine Performance. This visibility will enable the SARB to efficiently track and correct behaviour in the cash landscape, including monitoring and correcting processing machine settings timeously, ensuring correct currency yields throughout the cash industry and thus moving unfit banknotes to destruction quicker while recycling fit banknotes. It will also result in improved forecasting effectiveness through visibility of input variables thus providing more accurate currency orders to our printing and minting houses, removing supply chain bottlenecks, enabling the discovery and usage of any excess inventory in remote vaults to decrease wastage.

SARB Currency Management Department, SBV, Cash Cycle Participants, South African Banks.

South Africa

• Currency Integrity and Quality – Cash visibility program enables SARB to rapidly investigate and correct Processing Machines settings that are located at the different Cash Cycle participant’s premises. Incorrect machine settings not corrected timeously increase the risk of unfit banknotes being re-circulated back to the public, delays in the destruction of unfit banknotes and may create excess deposits back to the central bank. Previously the only way that this could be detected was through site inspections. Data visibility initiative gives the central bank visibility of machine setting fluctuations and their effects on a daily basis. The result is better quality banknotes in the hands of the public.

• Forecasting – Most of the activity for currency deposits and withdrawals in the Cash Cycle are between the CIT companies, Banks and the public. This creates several unknown variables in the SARB’s forecasting process, making forecasting of supply and demand of banknotes difficult. This initiative provides visibility of these variables and related quantities, to serve as inputs into the forecasting processes. This activity improves the SARB’s response to shocks and unexpected events and the management of stock buffer levels.

• Supply Chain Management – This initiative enables the SARB to plan adequately and plan for resources upfront in anticipation of processing volumes that can be quantifiable upfront. The SARB is able to foresee any abnormal fluctuations in deposits or withdrawals of currency and plan to meet demand and supply requirements. The initiative assists in uncovering any unused stock at remote vaults to decrease wastage associated with ordering new currency stock. This initiative enables Stock age analysis at the different vaults throughout the cash industry so that ageing stock can be utilised efficiently. The result is improved downstream fulfilment of orders and reduction in the risk of downstream stock shortages or oversupply of currency within the supply chain.

The main stakeholders in this initiative are the South African Reserve Bank, CIT companies (SBV is the main player), other smaller CIT companies transacting with SBV, Banks transacting with SBV and BankServe. A project team was formed for the first phase of the project, with members from the SARB and SBV. The project was divided into phases in accordance with the different data subject areas identified, beginning with Processing Data.

Collaboration started at Executive level between SARB and SBV and an agreement was reached through a Non-Disclosure Agreement to share data between the two parties. Collaboration currently involves a business analysis workgroup, a development workgroup, and a testing workgroup. These working groups meet weekly to discuss progress, risks and challenges of the project. Collaboration internally within the SARB is between the Currency Management Division and the IT Department. Progress is then reported back to the Head of SARB’s Currency Management Department and then reported to the SARB’s Executive for the Currency Cluster at a quarterly meeting.

Most central banks delegate the management of currency operations to external public facing entities, who then report back activity to central banks. The SARB has taken an intentional stance through this initiative, to improve the visibility of cash industry operations, so that it can control the quality and quantity of the product provided to the public. South Africa is a very unique country with diverse cultures and traditions; in some traditions, cash is seen as a store of value and the availability and quality of the currency is very important. SARB and the involved stakeholders are using internal permanent resources for this initiative, hence minimising external consultation costs. Existing technology platforms are being re-used, so as to minimise technology acquisition costs. The design of the solution allows for automatic scalability for the addition of new data points and processing centres and vaults. This will result in minimal development for the addition of datasets and expansion of data collection at additional sites.

This initiative utilises automation techniques in order to retrieve the data as frequently as possible, with no human intervention. Application Programming Interfaces (APIs) will be used to transfer data responses seamlessly to participants. This API will be re-used to request data using site and date ranges, as parameters. Data received is stored in the SARB’s Data Warehouse platform. This data is then visualised using MS Power BI, a leading business intelligence and analytics tool. Users are able to extract data and create custom reports from the Power BI portal. This data is refreshed at regular daily intervals in order for users to be able to monitor Cash Industry events daily.