Modernizing the cash supply chain

Martin Bauer is the vice president of commercial markets in North America for Giesecke+Devrient (G+D), a global security technology company.

The cash logistics industry in the United States has witnessed ongoing changes driven by the need to address growing security concerns, operational inefficiencies, and regulatory compliance.

With cash logistics revenues projected to increase to $13.3 billion by 2030,  the industry is poised for significant growth. This expansion, however, brings with it a set of challenges that traditional cash transportation methods are increasingly ill-equipped to handle. Financial institutions and CIT (Cash-In-Transit) companies are thus compelled to seek innovative solutions to modernize their cash logistics operations.

Digitalization offers promising avenues for enhancing efficiency and security in cash logistics. Real-time tracking, forecasting demands, and optimized route planning and execution can modernize the way cash is managed and transported. Additionally, artificial intelligence can further enhance cash management efficiency by automating tasks, leading to faster and more accurate cash logistics.

The evolution of cash logistics

Historically, U.S. banks have relied on manual processes to manage cash transport, such as handwritten documentation, physical logs for tracking cash-in-transit, manual reconciliation of cash at delivery points and labor-intensive scheduling of armored transport routes. These methods, while effective in the past, are becoming less efficient as the scale of operations and the complexity of modern banking increase. Software is now viewed as a key enabler in transforming cash logistics by providing enhanced visibility, digitized workflows and automation.

Digital solutions are paving the way for an efficient, connected and data-driven future. By integrating IoT devices and AI, financial institutions can gain real-time insights into their cash logistics operations, allowing for better decision-making and resource allocation. This shift toward digitalization is not just about improving efficiency; it is also about enhancing security and reducing risks associated with cash transport.

Role of digitalization in enhancing cash logistics

One of the most significant benefits of digitalization in cash logistics is real-time tracking and security. IoT devices enable real-time tracking of cash-in-transit vehicles, enhancing security and operational efficiency. In the broader logistics sector, a survey revealed that approximately 55% of supply chain decision-makers have deployed or plan to deploy RFID or GPS/satellite tracking solutions. These technologies, usually used for tracking vehicles, can be applied to cash logistics to significantly reduce risks associated with theft and unauthorized access.

Tracking individual cash containers using smart labels, especially for bulk shipments between central banks and commercial players, can further enhance security. By creating a digital twin of each cash container —designed not just for transport but as part of a broader ecosystem for automating and optimizing cash handling — financial institutions and CITs can access information beyond the value of the cash, including fitness levels, threshold settings when sorted, and sorting results. This level of detail allows for better monitoring and management of cash logistics operations.

Route optimization and resource allocation are other critical areas where digitalization can make a significant impact. By using transport software for daily planning, exception handling, key management, and resource allocation, cash logistics providers can optimize routes and reduce operational costs. For instance, UPS reported a 6.5% increase in average daily volumes domestically, partly attributed to efficient route planning and resource allocation. By optimizing routes and forecasting services and deliveries, cash logistics providers can reduce fuel consumption or the number of vehicles and improve overall efficiency.

The future of digital cash logistics

The global IoT spend in the logistics industry is projected to grow from $35.2 billion in 2021 to $114.7 billion by 2032, with the U.S. market expected to reach $19.7 billion, growing at a CAGR of 11.1%. This investment indicates a significant trend toward adopting digital solutions, including in cash logistics, to enhance security and efficiency. 

Furthermore, the number of connected IoT devices worldwide is expected to reach 40 billion by 20305, reflecting a measured but steady expansion. This proliferation of connected devices underscores the impact of digitalization across various industries, including logistics.

AI solutions could accelerate the optimization of routes by integrating daily planning with forecasted demands and supplies. By leveraging AI, cash logistics providers can optimize routes, lower operational costs, improve service delivery, and even simplify route planning altogether. The integration of AI with IoT devices will further enhance the capabilities of cash logistics operations, making them more resilient and adaptable to changing market conditions.

The digitalization of cash logistics presents substantial opportunities for improving security, efficiency and cost-effectiveness. By leveraging real-time tracking, forecasting demands and optimized resource allocation, financial institutions can address the challenges of modern cash transport. As the industry evolves, embracing digitalization will be crucial for building a resilient and secure cash logistics infrastructure in the digital era.

The continued modernization of cash logistics through digitalization is not just a technological shift; it is a strategic imperative for financial institutions and carriers looking to stay competitive in a rapidly changing market. By adopting innovative solutions and integrating IoT and AI into their operations, cash logistics providers can enhance their capabilities, reduce risks and improve overall efficiency. The future of cash logistics is digital, and those who embrace this change will be well-positioned to lead the industry into a new era of growth and innovation.