Cash-in-Transit Service Australia Market Intelligence

Industry Outlook & Drivers

Regional Market Outlook on Cash-in-Transit Service

Supplier Maturity – The market is a duopoly, dominated by Armaguard and Prosegur, who offer a wide range of product portfolio, bundling CIT services with cash management and ATM maintenance services

Buyer Maturity – The maturity of buyers is also high, as they engage with suppliers on KPIs/SLA-based contracts, and focus on technologies to drive cost-savings

Market Dynamics and Trends

Consolidation of suppliers

• A shift in consolidation of suppliers has been witnessed in the last few years in Australia. A major reason being the increase in pressure on cost of staff, fuel and other elements are not reducing for the suppliers, making the profitability low

Growth in cash management services

• Cash management consists of verifying, reconciling, processing, forecasting, storing, and total management of customer cash and coin in a seamless and transparent manner for the customer
• Processing and managing currency has grown tremendously with the service providers dedicating state-of-the art facilities for currency processing and management

Retail cash automation

• Cash dispensers, smart-safes, and recyclers have been at the forefront when it comes to automating the cash handling process
• By providing the capability to accept, authenticate, sort, count, and in some cases dispense cash, these devices automate the back-office cash handling and provide significant labor savings to the merchant or bank using them

Growth in electronic payments

• The proliferation of payment options other than cash, including credit cards, debit cards, stored-value cards, mobile payments and on-line purchase activity, has resulted in a reduced volumes for the cash in transit companies

Growth in “Soft skin” CIT operations

• Historically, the CIT work had been completed by armored trucks but increasingly soft skin operators have commenced completing larger amounts of work in the sector. “Soft skin” CIT operations have a single guard who does not wear a uniform, an unmarked, unarmored vehicle with limited security features

Industry Drivers and Constraints

Drivers

Integrated/Bundled solutions

• The clients are leaning towards integrated solutions which can cover both cash management services and armored car services

Increase in ATMs

• ATM management has been a major driver of armored car services and cash management
• Installations of ATMs is forecasted to grow at a CAGR of 6.3% until 2019 in North America, which will continue to drive demand for armored car services

Increase in crime rate

• Increase in crime rate has driven the outsourcing of cash handling to specialist service providers, thus reducing the risk for customers

Laws and regulations

• Complying with laws and regulations related to Cash-In-Transit (CIT) has driven the outsourcing of these services to specialist service providers

Constraints

Rise in insurance premiums

• Increasing crime and theft rates calls for rise in insurance premiums
• Increase in pension liability

Pricing pressure

• Significant competition and pricing pressures in most markets

Decreased use of cash

• Decreased use of cash in developed markets
• Closure of numerous local bank offices has reduced access to cash

Porter's Five Forces Analysis – Australia

Supplier Power

• The cash-in-transit market in Australia is a duopoly and hence the supplier power is high
• The CIT industry is both a labor intensive and capital intensive industry, where established players like Armaguard and Prosegur dominate the market due to their service capabilities

Barriers to New Entrants

• High supplier consolidation becomes a threat for the prospective vendors in terms of creating a market space for themselves

Intensity of Rivalry

• The rivalry among competitors is pretty low as there are only a handful of suppliers who can provide integrated cash management solutions and they have a reasonable market share for themselves

Threat of Substitutes

• Large buyers can leverage volume of contract as a bargaining power, in an otherwise supplier dominated market
• Large buyers make an attractive client for any supplier in terms of contract volume, thereby gain better negotiating power