Engendering financial inclusion through BVN

In furtherance of its efforts in the development of a safe, reliable and efficient payments system in the country, the Central Bank of Nigeria (CBN) – through the Bankers’ Committee and in collaboration with all banks in Nigeria – on February 14, 2014 launched a centralised biometric identification system for the banking industry tagged Bank Verification Number (BVN).

BVN is a biometric authentication of bank customers using Point of Sale (PoS) and Automated Teller Machines (ATMs). The biometric authentication is meant to address the safety of customers’ funds and avoid losses through compromise of Personal Identification Numbers (PIN).

The exercise includes getting bank customers’ biometrics, with the use of fingerprints, and facial image, after which each customer is given a bank verification number. The essence of the project is for banks to know their customers better, while tracking their credit records and other details which will aid the operation of banks in general.

With the increasing incidence of compromise on conventional security systems, particularly in password and personal identification number (PIN), there is a high demand for greater security for access to sensitive or personal information in the banking system.

Consequently, the project gives a unique identity that can be verified across the Nigerian banking industry (not peculiar to one bank) as customers’ bank accounts are protected from unauthorised access. Besides, it will address issues of identity theft, thus reducing exposure to fraud as well as enhancing chances of being able to fish out blacklisted customers.

Through the project, biometric information is used as a means of first identifying and verifying all individuals that have accounts in any Nigerian bank and, consequently, as a means of authenticating customers’ identity at points of transaction.

Apart from engendering confidence in the system, it provides a uniform industrially-accepted unique identity for bank customers, even as activities of serial debtors will be reduced if not completely eliminated as every account that the customer has is linked in all Nigerian banks.

Furthermore, for authentication purposes, individuals performing banking transactions such as applying for loans would be required to identify themselves using their biometric features which will be matched against information in the central database. It therefore enables banks to be prompted during account opening and credit check if a customer has been blacklisted by any Nigerian bank.

Despite cricitisms from some quarters against the project – such as it being a duplication of the the functions of the National Identity Management Commission (NIMC) – we are of the belief that it is a welcome development as it provides opportunity for CBN to deepen its banking inclusion strategy while banks could leverage it to create risk assets and, consequently, avail the critical sectors of the economy of the much-needed credit.

It is against this background that we support the CBN’s plan of action in ensuring that the project succeeds. For instance, June 2015 has been set as deadline for all banks’ customers to have the BVN, and any bank customer without the BVN would be deemed to have inadequate KYC.

Again, transactions valued at N100 million and above are to be allowed for customers with the BVN by March 2015. These include, but not limited to, money transfers, loans, contingencies, etc.

Equally, CBN currently requires all deposit money banks (DMBs) to submit to NIBSS, as part of their weekly returns on customers’ account details, the account status of customers that have submitted their BVN and those that have not. NIBSS in turn has since last October commenced rendering of consolidated returns to the CBN on weekly basis.

We therefore urge Nigerians to embrace this project, even as we call on the banks to sustain the current efforts at sensitising and mobilising customers and accosting customers at their banking halls. The CBN, on its part, must not relent on its promise to monitor compliance with the requirements of the project and sanction defaulters.