As the saying goes, ‘money makes the world go round’. When money stops flowing, businesses struggle, consumers grow frustrated, and economies grind to a halt. However, as the world moves towards a cashless society, digital systems run the risk of shutting down due to cyber threats or tech failures.

Transitioning to a cashless economy is a “significant undertaking”, says Vish Phaneendra, Head of Solution Engineering, APJ, at Yugabyte. Yugabyte is the company behind YugabyteDB – an open source, distributed SQL database trusted by some of the world’s largest banks and financial services companies including Wells Fargo and Fiserv.

For a cashless economy to thrive, governments must ensure digital financial systems are robust, resilient, and can reliably serve citizens 24/7, 365 days a year. Phaneendra shares the tricks of the trade that can help governments achieve this.

Transitioning to a cashless society 

Pre-Covid, the world was largely a cash-based society, says Phaneendra. But this shifted with the pandemic, which acted as an “accelerator” to move societies from cash payments to digital ones, he adds.

Today, digital payments are opening doors for financial inclusion and more convenient citizen services around the globe. GovInsider has covered several such initiatives:

  • India is bringing the vulnerable and rural populations into the cashless fold. They do so by providing e-vouchers for financial aid, and making it easy for everyone to create and manage a bank account even without internet access.
  • In Cauayan, the Philippines, citizens can now pay for their utility bills, school fees and other administrative fees through a mobile app.
  • Likewise, Malaysia has a website where citizens can pay for their taxes and fees.
  • In Togo, access to digital payments are keeping the lights on so children in remote and off-grid areas can study after dark.

What countries need to go cashless

Governments need to take into account four factors when they are going cashless, Phaneendra says.

First, they need to have highly resilient digital infrastructure, which includes databases and cybersecurity measures, says Phaneendra. They also need to be able to process payment “within seconds”, he adds.

Next, digital payment systems need to be interoperable. This means that money needs to be able to switch hands easily across different banks and recipients, Phaneendra explains.

Consumers and financial institutions also need to be able to view their financial transactions easily. In a cashless economy, consumers need an easy way to view the details of their different bank accounts, says Phaneendra. Meanwhile, financial institutions need to have a clear overview of the software behind digital payment services to manage them efficiently.

Finally, a lot more regulation “needs to be in play” as societies go cashless, Phaneendra says. “How do you handle security? Authorisation? And how do you handle data exchange?” he questions. To tackle this, governments need to set up supervisory systems that are able to manage and monitor fraudulent activities, he explains.

Moving into a new, cashless world – easily and affordably 

Moving towards a cashless world can be a daunting task when taking into account these challenges, but having a resilient and flexible database can help them do so more easily.

Resilient databases, for instance, ensure financial institutions can always access the financial data they need. YugabyteDB is operational “24/7, 365 days a year”, says Phaneendra.

This database is distributed, meaning that the data is replicated across several locations. If data in one area becomes unavailable due to reasons like a power outage, then financial institutions can simply draw data from another area. This means that services continue running, even if there is a power outage of infrastructure failure in one location.

Another way Yugabyte helps countries transition into a digital economy is by reducing cost. “As you move into this new world, it has to be cost effective,” Phaneendra highlights.

YugabyteDB does this with its pay-as-you-go model. This means that financial institutions who want to go digital can start small, and pay only for what they need at the current point in time. As the number of digital transactions increase, they can then scale up; and vice versa if the number of transactions decrease.

The future of digital cash is open source

YugabyteDB is also 100 per cent open source and easily adaptable to different platforms. This allows financial institutions to roll out digital payment services without needing to spend additional time adapting the software. “You no longer have to worry about being able to run your system in just one specific cloud,” he says.

For instance, Yugabyte works with banking software provider Temenos to offer “core banking solutions”, Phaneendra shares. This includes building and deploying pre-built digital banking services for banks of any size, wrote Business Wire.

YugabyteDB’s open source nature means that Temenos can provide banking services to its customers on whichever cloud platform they use, or even if they operate on premise. “We provide that consistent experience across any infrastructure,” he says.

With YugabyteDB, Temenos scaled the digital banking services they provide to customers rapidly and without limits. This was especially vital for Temenos, whose software serves 1.2 billion people, a third of the world’s banking population.

This applies even if they were using traditional databases. Transitioning from these old systems to new ones can be “an additional burden or effort”. YugabyteDB avoids that by providing full compatibility with older databases such as PostgreSQL, explains Phaneendra.

Money today may no longer look like paper notes and metal coins, but they continue to change hands through the digital realm. As it  navigates the ones and zeros, Yugabyte helps to smoothen the road with its flexible and resilient data centres.