Cash moving industry shakeup may see writing on the wall for Chubb & AGD
Posted on Saturday, December 13 @ 08:00:18 NZDT
Topic: News Clippings
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 Westpac bank has announced an agreement to drop Chubb and move to Australian company Armaguard Currency Management (ACM) for all its cash moving business in New Zealand.
ACM will commence as Westpac’s cash in transit and ATM service provider in mid 2009 following Chubb several months ago raising its prices 40% at the same time as saying they could not guarantee the level of service needed to keep ATMs and bank branches supplied with cash.
Chubb’s move was a desperate play to stay afloat as it has been losing money following a price war with fellow duopoly incumbent ADT Armourguard, where each company has been effectively cutting their own throats for years by reducing margins every time a tender came up.
The American owners of Chubb – UTC - appear happy to see Chubb fold in New Zealand as it cuts a loss making business, while Tyco, the American owners of ADT Armourguard, refuses to commit resources to take the banks’ business because the New Zealand market is so small.
ACM is wholly owned by Linfox in Australia, are highly capitalised, control over 70% of the Australian market, and have taken the traditional ‘cash in transit’ service to an advanced level.
ACM Managing Director Keith Broadhouse says, “A number of banks and retailers have asked us to go over to New Zealand – they’ve asked us for a while. We’re willing to invest a fair bit and we’re confident we can go very well.
“We have focused our business to minimize the overall cost of cash for our customers, rather than just providing cash in transit services.”
This entails providing cash forecasting, processing and logistics in a system of integrated processes to reduce the cost of cash management for banks and retailers.
In additional to financial institutions, ACM will provide its currency management systems to other businesses which use cash.
“There’s this perception that cash in circulation is going to reduce. In Australia, every year since federation, cash in circulation has grown greater than inflation, and it’s a similar story around the world. I think the biggest kick cash in circulation had in Australia was when they introduced GST. I think it went up close to 15% or more. So a lot of people decided they wanted to get into cash because they didn’t want to pay GST – so cash just keeps growing”, says Mr Broadhouse.
While Westpac has managed to address the rather large problem of keeping their outlets stocked with cash, as yet the other banks have not – and banks can’t not have cash.
The pressure will now be increasing on other banks, who will be scrambling to come to an arrangement that guarantees service.
ADT Armourguard has sold off both their security guard service and their alarm monitoring business, so cash-transit is effectively all they have left, which means both Chubb and ADT Armouguard appear to be staring at the writing on the wall.
by Mitchell Hall | Friday December 12 2008
NBR
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