There are so many factors that can affect the success of an investment. A thorough appreciation and understanding of the commercial conditions surrounding a business venture will help mitigate the risks involved. Our blog looks at the key drivers.
When researching an investment opportunity, it is critical to understand the market landscape. Here are some key aspects to consider when selecting safe deposit locker facilities as a project.
Why are automated safe deposit lockers an attractive investment opportunity?
“An especially positive commercial prospect made possible by a unique combination of favourable circumstances.” These are the exact current, market and business conditions we find ourselves in when reviewing the safe deposit locker sector. Alternatively explained, a shrewd investment opportunity is when the probability of success far outweighs the level of risk involved.
Let’s examine such an investment proposal and market conditions in more detail. By appreciating the solution, and looking at the current provisions and assurances that will help improve the odds in your favour, you can judge for yourself if investing in a safe deposit facility is worth your while.
The investment proposal is a fully automated safe storage solution, that provides the following key features:
The business of providing 24/7 self-service, safe deposit locker facilities, is a highly lucrative investment opportunity. By combining next-generation automated technology and advanced customer identification features, service providers can offer their customers round-the-clock accessibility and still uphold the highest levels of security.
View the solution in action in our short YouTube video:
The landscapeThere are multiple reasons why the outlook for such an investment is currently so appealing.
Safe deposit centres are an established market. This reduces your risk. Opportunities exist to be pioneering and innovative in established markets and the conventional supply of mechanical lockers is a well utilised and well accepted marketplace with massive potential. However, no industry can stand still. It must adapt and reinvent itself to deal with modern challenges and in today’s 24-hour, high-tech society, customers expect to be provided with access to their valuables whenever they want. The added beauty of the automated solution is that it is also a familiar, user friendly self-service terminal concept with high customer acceptance and thus one potential obstacle is already overcome.
This market is growing. According to researchreportsworld.com, the global safe deposit box market is anticipated to rise at a considerable rate in the next five years. In 2020, the market was growing at a steady rate and is expected to climb even further over the projected horizon.
One of the main factors for the increase in demand is the growing investment in tangible assets, i.e. entities that require safe storage like precious metals, due to their continued high value prognosis and better ROI versus liquid assets. Factor in poor interest rate returns, which in some European countries have led to negative interest rates, and instead of earning from their liquid asset investments, investors have found themselves paying for the privilege to invest.
Naturally, this has caused shrewd speculators to seek alternative ways to invest and more in hard assets like valuable metals. As a result, the price of gold has risen 28% since the start of 2020. According to Reuters, this growth trend will continue in 2021.
What better place to secure these valuable assets than an exceptionally secure, self-service locker facility with 24/7 access?
Having always been a service offered by financial providers, the demise of the bank branch, accelerated by the pandemic, is a strong factor in the reduction of current availability of this service.
Leading Global Management Consultants, Kearney, predict that 25% of bank branches will close across Europe in the next three years as customers favour digital banking. This is a sharp increase in the ongoing trend of the shut down of bank branches across Europe, which saw 35% percent closures in the last ten years.
Customer demand for secure, flexible safe storage away from their home will increase further as branch numbers decrease - those that have valuables will need to re-site them. Those that newly acquire tangible assets etc will have less choice. This has resulted in a great opportunity to fulfil the increasing demand for safe deposit box facilities.
Requirement for safety deposit lockers appears to be highest in conurbations, which in turn are the very same places that have the least amount of available living space. Population numbers have been steadily increasing in the world's largest cities, which has put pressure on the housing situation, because demand greatly exceeds the supply. It also means that a rising number of people must share the same space. This has created the trend currently referred to as Micro Apartments, Compact Living and Small Space Homes.
The smaller the living area, the less available and suitable space there will be for the secure storage of valuables and the greater the need for an off-site safe facility for those precious items.
When investigating the marketability of an opportunity, it is easy to concentrate on just new target audience potential. However, the older generation are the ones most likely to have the available income to invest in entities that require safe storage and are also probably the existing customer base who use bank provided facilities that are closing.
In Nov 2020 a Diebold Nixdorf research reported a third (35%) of bank customers saying they will always want access to physical, in-branch banking services in some capacity and one in ten (10%) consumers saying they will never exclusively choose online banking in the future. This goes to show that there are still many people that prefer to do their banking business offline and that the physical provision of facilities is a key aspect in the attraction of this investment opportunity.
It is not just the traditional locker contents that should be considered nowadays either. The continuous rise in the value of and investment in crypto currency is another driver, as people are looking for a place to securely store the valuable access data for their wallet.
With the technological capability of fraudsters today, it is not surprising that crypto currency investors are constantly being advised to store the access data of their crypto wallet - and in some cases the actual form of crypto wallet itself - in a safe place. There are different types of wallet, but in this day and age of cyber-crime, the advice is always the same, secure them.
Innovation is keyBeing perceived as an innovator is an important ingredient in the launch of a venture, as it establishes an entrepreneurial reputation on both a personal and economic level, attracting the interest of local and global media. Of course, there are different kinds of innovation. Technological advancement is momentum ever moving forward. Gunnebo’s solution is the evolution of technology that makes the safety deposit locker solution more flexible and user friendly, enabling the deployment of an innovative business model, and in turn disrupting the traditional banking industry.
In summaryHaving examined both the proposed investment and the favourable circumstances that surround this opportunity, it’s fair to say that there is a high probability of success. If all presented potential is maximised, you have many of the criteria required for a profitable investment.
The market conditions are ripe, there is a proven and growing demand and the differentiation will give competitive advantage. Any business that can grow market share within a growing market is going to be a good investment – so long as the payback period is short and resulting ROI is high.
One thing this blog post hasn’t tackled is the ROI and payback period, but that and even more compelling business case data are available in our free-of-charge investor guide entitled ‘’Why are automated safe deposit lockers an attractive investment opportunity? A guide for private investors.’ If you’re interested in learning more, we highly recommend you download it by clicking on the link below.
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Emmanuel Harir Forouch