Traditionally, the success of a Cash in Transit (CIT) operator has, to a great extent, depended upon the territory it is operating in.
Challenging territories are characterised by:
- A lack of focus on tackling criminal attacks on CIT operators by the authorities and law enforcement
- High investment costs required to provide adequate physical protection to valuable cargo
- Difficulties hiring and retaining quality employees
- Inefficient processes and procedures embedded in the industry
- Challenges in maintaining staff motivation and morale in an environment where margins are very tight.
All of these problems remain significant factors but we have recently seen how technology can rapidly allow new ways of operating. Technology alone cannot solve everything but it can certainly support operational efficiency, improve security and provide better and safer working environments for employees.
The following trends have been growing in recent years:
A smart safe or a ’bunch note acceptor’ is a safe that is typically installed at a retail store or restaurant with the capability to recognise cash as it is deposited in the safe and immediately credit the retailer’s bank account.
The advantage for the retailer is that risk of theft of the cash is immediately transferred to the CIT company once it is secured in the safe. The CIT firm will then collect the cash securely at regular intervals. In many cases, this practice has been replacing regular cash deliveries made by retailers’ employees to their banks.
The advantage for the CIT company is that this creates a new revenue stream with a monthly charge for the safe, plus it enables it to build new profitable routes for its transit services, by capturing new clients who weren’t previously economically viable on the old model.
Although for many years, the idea of a CIT vehicle being operated by one person was resisted by carriers and their insurers because of the greater fear of employee infidelity and the obvious risks entailed in leaving a vehicle containing cash unattended. New technology has enabled one-person vehicle to become viable.
Typically, the vehicle will contain drop safes enabling collections of cash to be secured without any ability to access it until the vehicle returns to base. The vehicle itself will continually be tracked by GPS and monitored at the control centre. This allows for the release of one-time codes to access safes containing cash for delivery to be linked to confirmation that the vehicle is in the correct location. GPS tracking is also linked with the ability to remotely shut down the vehicle if it diverts from its designated route, minimising the risk of theft.
The benefits for the CIT carrier are obvious in terms of reduced labour costs but there are also benefits for the employee. One-person vehicle operatives are selected from the most trusted and experienced employees and command a higher salary. Also, many employees prefer the freedom gained by working alone and are less at risk than in traditional operations because of the lack of access they have to cash in the vehicle.
In addition, there is a drive by many carriers to grow margin through merger and acquisition. In North America and Europe, this is a common growth strategy by the big global players but in some territories, such as Brazil, where organised attacks on CIT operations have reached unprecedented levels in recent years, merging with a competitor could be the only way to survive. Smaller operators are finding that they are unable to fund the required investment in upgraded security or the rising cost of insurance on their own. The insurance market for Brazilian CIT has shrunk dramatically in recent years as many underwriters have withdrawn from writing business in the territory.
Those that are still active are looking much harder at the risk mitigation in place before even considering insuring an account. In cash centres, the installation of bank note destruction machines, fog generators and reinforced walls have become minimum requirements whilst in vehicles underwriters expect hive safes or PUDU (Polyurethane Dispensing Unit) systems to be installed.
Response from the insurance market
Keeping abreast of the changes in technology and operating models remains key to the insurance market that has supported this industry for many years. With the industry starting to recognise the benefit of change, it’s imperative that underwriters maintain a close understanding of the subtle as well as the major changes in the risk profile of the industry.
Ultimately, all this change will present an opportunity for the Cash in Transit firms that make the right investments to charge their customers the ’right price’ for their services. This is something that has been very hard to achieve over the past decade. This can only be positive for the insurance market which will welcome the investment made by its clients in the protection the latest technology can offer. However, fundamentally, the key principles of risk management remain unaltered and ultimately begin and end with good management of the people in the Cash in Transit operation.
To serve you better, JLT and the London insurance market are constantly making enhancements to their products to move with the changing dynamics and advances in technology of the cash in transit industry.