Bank verification number: necessity of our time

Bank verification number: necessity of our time

   

For sure the Bank Verification Number (BVN) helps protect customer’s account from unauthorized access. It also gives them unique identity that can be verified across the Nigerian banking industry. What is more, it cuts down fraudulent activities on bank accounts and gives easy access to banking operations.  In this article our Editorial Advise, CHIKE UCHIME, he examines these facts and much money.

 

Mr. Ade Shonubi NIBBS

 

In Nigeria, the banking industry has recorded appreciable growth in the past decade, occasioned by different banking reforms aimed at building up confidence and stability of the system. Certain policies are designed from time to time to address observed deficiencies in the system. These policies help in streamlining banking operations.
     In recent times, the industry had witnessed electronic fraud cases, especially with the introduction of electronic banking, and also identity management challenges. The increase in compromise in the security system of the banking sector where there is supposed to be unfettered access to sensitive and personal information remained a source of worry to many customers.. Through this compromise, many customers had lost their funds. So, there is a great demand for better security of people’s funds.
      In a bid to address these obvious challenges, the Central Bank of Nigeria (CBN), in collaboration with the Bankers’ Committee, introduced the Bank Verification Number (BVN) initiative. The BVN uses biometric technology to register customers in the financial system. It records these physical features which are unique to individuals - fingerprints and the face. The record will be to identify the person afterwards. Once a person’s biometrics has been recorded, the BVN is issued; the account then would be accessed through BVN.
      At its launch on February 14, 2014, the exercise was described as an initiative that would boost financial inclusion. As those who had typically stayed away from mainstream banking due to low literacy levels, would be able to open and access their bank accounts using their biometric information rather than the traditional identification method. The exercise is managed by the Nigeria Inter-Bank Settlement Systems (NIBSS).
       As part of efforts to boost compliance from Deposit Money Banks (DMB), the CBN had directed the banks to enroll 40 percent of their customers on the BVN platform by December 31, 2014, and 70 percent by March 30, 2015. As part of the initiatives to encourage members of the public to enroll for the exercise, the apex bank also directed banks to only honor transactions over N100 million from customers with BVN effective March 2015. Bank customers were further advised to register and get the BVN by June 30, 2015 and warned them that customers without the BVN would be deemed as having inadequate Know-Your-Customer requirement at the expiration of the deadline.
      There are many benefits associated with enrolling in the BVN initiative. The BVN protects the customer’s account from unauthorized access, and gives him a unique identity that can be verified across the Nigerian banking industry (it is not peculiar to one bank). It cuts down fraudulent activities on bank accounts and gives easy access to banking operations. The BVN will help the banking system reduce situations where loan defaulters, for instance, move from one bank to the other and the banks extends new credits to them without knowing their history. Banks would be able to track transactions across all banks in Nigeria with more ease.
       According to the Managing Director of Nigeria Inter-Bank Settlement Systems (NIBBS), Mr. Ade Shonubi, “BVN would allow us begin to build retail credit.” He went further to say:  “Today, banks have concerns over identification in retail lending, that is why the entire retail consumer lending portfolio is targeted at people with formal employment whose employment can serve as a point of reference. There are however a lot of self employed people as well as others working in smaller organizations that require this, but do not have access due to the identification issue, as no bank will take the risk of lending to them considering cases of resignation and eventual run-off. But with the availability of BVN, these set of individuals will also benefit from retail lending as identification and tracking issues will be mitigated. He also argued that the initiative will allow bank customers to be able to authorize financial transactions on ATM or Point of Sales (POS) using their biometrics.
     Similarly, the Managing Director of Dun Merrifield Asset Management Research, Tola Odukoya, said the BVN initiative is a welcome development in the sector as it will help to check cases of fraud in the banking industry: “In my opinion, it is a good initiative that will further reduce the incidence of fraud in Nigeria if it is implemented. The growth of electronic transactions in Nigeria means there will be a consequent exposure to associated risks, and the BVN, given its biometric features, will go a long way in counteracting such risks. For example, the use of biometrics to authentic transactions in the near future is a case in point”
      As the public embraces the initiative with enthusiasm, it should be aware that some fraudsters are trying to undermine the exercise by providing seemingly easier registration options for bank account holders. They request these details online and threaten that the account would be closed if the owner does not provide them with details. Their target is the account holder’s money. The best way of enrolling remains direct communication with one’s bank. In the same vein, CBN is advised, as it complements the BVN initiative, to ensure the security of the data from rogue bankers and also importantly from damage, as has been the experience with other sectors that engaged in biometric enrolments. It should also create measures to punish banks that might exploit the information they have to blackmail customers with whom they have disagreements.
      Finally, the decision of the CBN to extend the BVN exercise by four months, until October 31, has elicited widespread commendations among Nigerians as many described the extension as a welcome development and added that if the initiative was not extended, it would have effectively shut out many Nigerians who could not enroll in the scheme, thereby denying them some banking services.
       According to media reports credited to the Enhancing Innovation and Access, an organization committed to promoting of financial inclusion in the country, out of about 28.6 million adults in the country operating bank accounts, only 14 million were believed to have registered as at Friday before the first closing date of June 30, 2015.
        The penchant of Nigerians to wait till deadline before rushing to participate in certain important exercises has been condemned. This was witnessed in the last days before the first deadline, as bank customers crowded their banks scrambling to have themselves registered, even when they had ample opportunities since last year. Those who have not yet enrolled are advised to seize the window created by this extension and get themselves registered.
        Chike Uchime is the Editor-in-Chief and publisher of the Lagos based Forward Magazine. Tel: 08033444604, 08176856384.