G4S plans to move into operating bank branches
The FTSE 250 listed company said it was now in discussion with some of the biggest banks in the UK, Netherlands, Cyprus, Greece, Belgium and Ireland over the launch of high street branches.
The move is part of G4S’s attempts to rebuild its business, which employs 620,000 staff in 110 countries. In Britain, G4S’s reputation has been tarnished by a failure to provide enough security guards at the London 2012 Olympics and for overcharging for the electronic tagging of offenders.
The idea is to provide cash handling and depositing services for customers of different lenders from the same outlet.
“We are looking to step into the space that banks want to vacate,” said Graham Levinsohn, European chief executive of G4S. “It is clear from the number of closures that banks don’t want tellers to be counting cash inside branches. It is simply uneconomic for banks to keep staffing bricks and mortar buildings but it makes sense for us.”
Banks in the UK and across Europe are retreating from the high street as they offer more services online and on mobile, triggering concerns about the impact on local communities and retailers. The pace of closures has accelerated in recent months despite political sensitivities.
The big six retail banks — Lloyds Banking Group, Royal Bank of Scotland, HSBC, Santander, Barclays and the Co-operative — have closed 600 branches over the past year, according to research by the BBC. The lenders say branch footfall is dropping as customers increasingly turn to mobile banking.
In total, about 3,000 branches have shut over the past decade, according to the Campaign for Community Banking Services, leaving about 8,000.
It is clear from the number of closures that banks don’t want tellers to be counting cash inside branches.
“There’s lots of pressure on banks to keep the last bank in any town open,” said Mr Levinsohn. “But banks are keen to close them because they are much more focused on the bottom line than they used to be. It’s a very competitive market.”
The UK’s banking body is aware of various mobile bank branch options being explored, according to people familiar with the situation. However, in the past banks have been cool on the idea of shared branches, as they still rely on bricks and mortar premises for marketing and sales.
G4S already provides rural banking services, called banks in a box, to remote areas in South Africa. Mr Levinsohn said he would rather provide mobile units in Europe, but that this would be negotiated with the banks involved and that high street outlets were also being considered. In the Netherlands, G4S machines and staff are already used in some bank branches.
Despite forecasts that card and contactless payments would lead to the death of cash, the decline is proving slower than expected, according to analysts.
The UK is a European leader in the use of card and online payments but 52 per cent of transactions are still in cash, according to Bank of England data published last year.
G4S believes its cash solutions business, which accounts for 14 per cent of group revenues, or 25 per cent of profits, is poised for growth.
The company has struck deals with Walmart, Center Parcs, and Crowne Plaza hotels for its new Cash 360 services — which use machines to count cash, reducing the risk of theft by cashiers.
G4S fought off bids from private equity last year for its cash solutions business, and rumours of interest in the division have resurfaced.
Banks started to outsource their cash management operations to third parties in the late 1990s when the rollout of ATMs started to expand. Companies such as G4S, Securicor and Prosecur took over the responsibility of transporting cash to ATMs, retrieving cheques and cash deposits left by customers and fixing any problems with the machines.
Source:www.ft.com
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