OFIs to suck up fresh debutants into financial inclusion fold

Plans to widen the Bank Verification Number (BVN) registration project to clients of Other Financial Institutions (OFIs) may propel 180 million Nigeria in the right direction as it takes on an unbanked adult populace almost six times the size of Kenya’s.

The disclosure to expand the BVN process to OFIs ranging from Micro-Finance to Primary Mortgage Banks was made by Dipo Fatokun, Director of Banking and Payment Systems, Central Bank of Nigeria (CBN).

“Effort is on-going to ensure that customers of Other Financial Institutions (OFIs), such as Microfinance Banks and Primary Mortgage Institutions, are brought into the system and begin to get their BVNs,” Fatokin said at a forum organised by Finance Correspondents Association of Nigeria (FICAN) in Lagos over the weekend.

The BVN was introduced in 2015 and is used to verify the identity of each bank’s customer for “Know your customer” (KYC) purposes. It was implemented to help reduce fraudulent bank transactions, increase operations efficiency and give customers access to future credit facilities.

The number of BVN linked to customers’ accounts as at August 23, this year, was 36.7 million while the total number of individual customers in the banks at the time was 59.9 million, according to the CBN.

“There is an interrelationship between the BVN project and the financial inclusion project, both are complementary and are geared towards ensuring Nigeria is one of the top 20 largest economies in the world by 2020,” an operations manager at an MFB with a client base of 2 million, said in an interview with BusinessDay.

“I have always been an advocate of the role other financial institutions can play in attracting the unbanked populace given their flexibility. Expanding the BVN registration to them is ever more crucial to growing financial inclusion, given that the DMBs have plucked the low hanging fruits.

“With this move, I believe we can close the gap on adults without bank accounts and bolster financial inclusion,” he added.

Findings from the Enhancing Financial Innovation & Access (EFInA) “Access to Financial Services in Nigeria” 2014 survey, revealed that the number of Nigerian adults nationwide who are banked increased from 28.6 million (32.5% of the adult population) in 2012 to 33.9 million (36.3% of the adult population) in 2014.
However, 36.9 million adults, representing 39.5 percent of the adult population, are still financially excluded.

Kenya’s unbanked adult populace is 6.2 million, after the recent Brookings financial inclusion report showed that 75 percent of the East African country’s 25 million adults had bank accounts, the highest percentage in Africa.

Fatokun of CBN added that the apex bank would have OFIs customers enrol through deposit money banks because of the high cost of procuring the machines.

“We are considering using commercial banks as registration points for the OFIs customers.
“We also expect that many of the OFIs customers, who already have their BVNs, will supply the data to their banks, while those without BVN will register afresh,” he said.

LOLADE AKINMURELE