Trend Study: Cash Logistics Market
The management of cash is an expanding market driven by growth in cash circulation, a rising safe and vault demand for cash management, and outsourcing of cash management services by financial institutions.
The global cash logistics market is likely to grow to 36.57 billion USD by 2021, the Technavio Global Cash Logistics Market 2017-2021 study claims. This growth momentum is expected to accelerate during the forecast period because of rising security concerns among corporate houses and financial institutions. Furthermore, the need for secure systems and security professionals has increased due to a substantial rise in certain criminal activities: since 2015, there has been a 40% year-on-year increase in cyber attacks and cyber crimes against countries – for instance in February 2016 when the central bank of Bangladesh lost 81 million USD in a cyber attack.
In established markets like Europe and the US, the cash logistics market is expected to grow at a moderate rate; while in regions such as EMEA, South America, and APAC, the market is expected to grow rapidly due to the expansion of banking and financial institutions, as well as because of security threats in these areas. An increased flow of cash in emerging economies will boost the demand from banks and other financial institutions for end-to-end cash logistics services.
A highly competitive market
Five players control the majority of the business
“The market is highly competitive, with top five players - Brink's, G4S, GardaWorld, Loomis, and Prosegur - controlling the majority of the business,” the study explains, going on to state: “The vendors provide secure logistics for cash movement between different regions, which are governed by different laws. The industry must operate within the laws and regulations of different countries, with respect to their security concerns. The emergence of local players in the industry has led to five key players that look for mergers, ventures, and acquisitions. The service-level agreement between banks and cash and secure logistics firms is constantly evolving with more bank and financial institutions opting for end-to-end solutions from cash and secure logistics.”
Another major factor contributing to growth is the rise in cash circulation. The global cash logistics market by cash management was valued at 7.13 billion USD in 2016 and is expected to reach 10.06 billion USD by 2021, growing at a CAGR of 7.13%. “Customers may require simple cash management services, as well as a fully integrated approach to managing their cash supply chain,” according to the study.
These services could include online cash tracking, check imaging for real-time deposit processing, cash inventory management, and other web-based tools that enable cost reduction and improvement of services for banks and their customers: “By using online money processing information systems, customers and other financial institutions can track their cash management status”.
The global cash logistics market by cash-in-transit was valued at 9.48 billion USD in 2016, and is expected to reach 15.06 billion USD by 2021, growing at a CAGR of 9.70%; while the global cash logistics market by ATM service was valued at 5.91 billion USD in 2016 and is expected to reach 11.45 billion USD by 2021, growing at a CAGR of 14.14%. This latter segment includes services that minimize the risks associated with cash transfer or assets by ensuring safe transportation using different armored vehicles; thereby enabling the smooth functioning of financial institutions, businesses, and retailers. Cross-border transportation of cash, and storing of cash during transit require generic cash logistics solutions – primary services offered by cash-in-transit services.
However, 40% of the market is handled by smaller local players
Which finally leads to the global cash logistics market by geography: In terms of revenue the market is dominated by EMEA, a region that in 2016 accounted for 54.04% of the market share, followed by South America accounting for a 24.69% share. EMEA is expected to register the fastest growth at a CAGR of 12.11% during the forecast period. The cash logistics market in North America was valued at $3.41 billion in 2016 and is expected to reach $4.38 billion by 2021, growing at a CAGR of 5.13%; the US is the major revenue contributor to the market.
Last but not least, the cash logistics market in APAC was valued at $1.38 billion in 2016 and is expected to reach $1.97 billion by 2021, growing at a CAGR of 7.38%. It is expected to register high growth during the forecast period, which Technavio explains “is because of the expansion of banking facilities in remote locations and rise in the flow of cash circulation due to high cash demand in this region.” A developing transport infrastructure, a rising number of ATMs, and increased spending power in the region have contributed to the growth in the market. In addition, an increase in foreign trade and investments, and growing concerns regarding safety and security in the region, will propel the growth of the market during the forecast period.