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Now that banks are spending more on virtual security than physical security, robbers are going to have to change their strategies.

I got into an interesting discussion about bank robbery at a recent lunch. We were talking about risk and risk analysis. It happens that Consult Hyperion has a very well-developed risk analysis methodology (it’s called “Structured Risk Analysis”, or SRA) that has been used rather successfully on a wide variety of transactional services around the globe to help clients to evolve security architectures and to direct countermeasure expenditures effectively. I was trying to make some points about why proper risk analysis like this is a more cost-effective way to proceed than (for example) panicking about newspaper stories on hacking, and that led to a train of thought around cost-benefit analysis for the robber, not the bank. Are robbers put off by thick doors and barred windows and such like? Are robbers deterred by visible, physical symbols of security?

The security of physical buildings is no longer as important for financial services.


This is a fair point. So it set me thinking: if you are an amoral sociopath desperate for money, are you better off robbing a bank or working for it? As a responsible father, I want to help my teenage sons chart the best course for life. Right now, they are intent on going to University to study socially useful subjects in science and engineering, whereas I am trying to persuade them to become Somali pirates or Wolves of Wall Street. Having studied science and become a wage slave trapped in mortgage serfdom I understand that side of the equation, but am less certain of the other. So I started off by reading a paper called the “Decision-Making Practices of Armed Robbers” by Morrison and O’Donnell.

This paper is based on a study of commercial armed robbery in London, UK, involving the analysis of over 1,000 police reports and inter- views with 88 incarcerated armed robbers.

The paper, being about UK robberies, contains an interesting snippet: a great many of the armed robbers in the UK use imitation firearms even though they have ready access to real ones. I imagine that in the US the use of imitations is vastly less prevalent, since it’s presumably harder to buy an imitation gun than a real one there. But I digress.

almost all of these robbers evaluated the offence as having been financially worthwhile (aside from the fact that they were eventually caught and punished for their crime).

So robbing a bank seems like good idea, if you exclude the possibility (in fact, the likelihood) of being caught. I suppose this is standard “Wolf of Wall Street” thinking though isn’t it?

Neither does it seem practical to expect financial institutions and commercial properties to reduce counter cash much more than they already have.

I disagree, of course. This is exactly what we should expect them do, since as far as I am aware there is a direct and measurable relationship between the amount of cash (more on this later) and the amount of crime.

Even when the amount of money obtained was quite small (an element often touted in support of the irrationality of economic criminals), it must be recognised that even apparently small sums may be adequate for the offender’s immediate needs. Hence, gains may be subjectively much larger than they appear

So even thought the rewards of armed robbery seem to me, an educated middle-class professional, to be rather low, they are still sufficient to attract the robbers, because their needs are immediate and limited. They guy in the Nixon mask isn’t robbing a bank to pay his way through college or to obtain seed finance for a brilliant start up idea, he just needs to buy a car or some drugs or whatever. This article seems, then, to indicate that so long as there is some cash in the till, there will be robberies. This is not an observation confined to banking.

Our results indicate that the EBT program had a negative and significant effect on the overall crime rate as well as burglary, assault, and larceny.

[From Less Cash, Less Crime: Evidence from the Electronic Benefit Transfer Program]

What they are talking about here is the use of Electronic Benefit Transfer (EBT) programmes in the US, whereby benefit recipients are paid electronically and given cards that they can use in shops instead of being given cash. The authors found a 10% drop in crime correlated with the switch to EBT. It seems pretty overwhelming evidence, and even more so if you read the paper, which notes no impact on crimes that do not involve the acquisition of cash. If we can to stop armed robberies, that would surely be an excellent social benefit to the move to cashlessness and would help us to explain the nature of appropriate regulation to legislators.

But back to the specific point about the relationship between bank cash and robberies. What should we do about it, other than the obvious, necessary and socially-beneficial step of abolishing $50 and $100 bills (as well as £50 note and €100, €200 and the €500 “Bin Ladens” as well)? It looks as if the answer is, essentially, nothing.

But with most robbers taking a mere pittance and bank robberies being a relatively rare crime (there are more than 6,000 commercial banks in the United States and thousands more credit unions), it’s barely worth it for banks to invest in the screens, which cost a couple thousand per teller window to install… Overall, it’s probably not worth it to attempt a bank robbery, the researchers conclude. “The return on an average bank robber is, frankly, rubbish,” they write. “It’s so low that it is not worth the banks’ while to spend as little as [$7,000] per cashier position at every branch on rising screens to deter them.”

[From What You Should Know Before Robbing a Bank – US News and World Report]

The armed robbers, like everyone else, follow the money – literally – and so cash-in-transit (CIT) robberies are now the preferred option. We see the same in Europe where countries that have much higher usage of ATMs have much higher CIT robbery rates than countries that have lower ATM usage (see, for example, Sweden and Denmark).

More people seem to be taking that advice: In 2004, there were more than 7,500 bank robberies in America, 26 percent more than there were in 2010. According to the researchers, “robbing banks is no longer what you could call the crime of choice.” But they do have some other advice: “Security vans offer more attractive pickings.”

[From What You Should Know Before Robbing a Bank – US News and World Report]

Overall, then, we see another early indication of the emerging post-cash era: Spending on physical bank security is being reduced and spending on virtual bank security is being increased. We do, indeed, live in interesting times.

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