Competition hots up as firms cash in on G4S woes

The recent thefts of money in transit under G4S care have opened up the cash-in-transit business to intense competition.

Rivals are resorting to technology and fleet expansion to snatch business from the firm.

Main players Bob Morgan Services (BM), Wells Fargo and KK Security have started to eat into the 75 per cent market share held by G4S.

On Tuesday, KK Security that is a year-old in cash-in-transit business (CIT) announced a new business model that relies heavily on technology to assure clients of the safety of their money.

The company unveiled real-time tracking of CIT vehicles using satellite technology and plans to introduce a smoke box that defaces currency in case of tampering.

Vehicles that divert from the programmed routes will prompt an alert to the control system that triggers and alarm system.

KK Security said new business has started flowing in as a result of the use of technology and forecast growing its CIT business from the current overall market share of three per cent in Kenya to 15 per cent by the end of the year.

“We project this growth because of the good number of contracts we have signed with local banks in the last two years,” said Noel Grier, of KK Security.

The company announced creation of KK Lodgit Limited, a joint venture with European-based Integrated Risk Management Services (I-RMS) to handle its CIT business.

G4S’s 75 per cent market share was shaken by regular theft of money by members of its staff, a factor that has led to the realignment of the industry.

The latest robbery involved loss of Sh300 million, a shocking figure in the hands of people already classified as criminals by the police.

The theft led to the withdrawal of police escort by the government.G4S has also been summoned on Wednesday to explain to the industry body, the Kenya Security Industry Association, why it should not be suspended from doing CIT business in Kenya because of what was seen as negligence on its side, an industry player said.

CIT business contributed to 16 per cent of the company’s average revenues of Sh5.3 billion based on 2009 statistics.

But the company’s problems have aided their rivals, triggering a wave of business growth led by changing customer loyalty rather than growth of business.

Bob Morgan Services for example said its business had been growing in the last few months. It now controls about 15 per cent.

The company has signed new contracts with banks in the last four months too, and forecast that its market share could reach 20 per cent soon.

“CIT is a sensitive business. We do not want to grow it more than we can handle,” said Richard Ndege, Sales and Marketing Manager.

But even with the new of tracking technology, the industry agrees that incidence of CIT theft by employees and outsiders will only be dramatically reduced when the smoke box is introduced.

The smoke box is an intelligent box that triggers itself to discolour the currency when it is tampered with.

That currency become unusable ,according to the proposed regulations of the CBK and has to be replaced.

The cost of replacing the currency will be borne by the CIT company at a cost yet to be determined.

KK Security official however said the cost could near the six per cent the value of defaced money based on what is charged in Britain.

“The can help reduce theft incidence tremendously and reduce the cost of cash in transit by about 50 per cent. CIT costs vary widely depending on the company, amount of money and the frequency at which it will be transported,” said James Omwando, director of KK Security.

The box will also help to bring down the cost of CIT insurance that is calculated based on the company’s risk assessment by the insurer and the prevailing risks in the industry.

CIT companies said insurers have now become “very wary” of insuring CIT because of the recent spate of thefts by G4S employees.

The box will also reduce used of police escorts, which the industry said adds the cost of transporting money by 33 per cent.

The cost of the intelligent box is estimated at Sh268,000 per unit.

The industry estimates that the chase car, additional driver and at least four AP’s cost the CIT companies approximately Sh120,000 a month. The boxes have a shelf life of five years.

Kenya’s CIT companies could also use a technology known as SmartWater Technology, a product developed in Britain to protect cash in transit couriers and guards.

SmartWater marks are invisible to the naked eye and can forensically link criminals with individual crime scenes.