Countdown to bank verification number

 

CBN Headquarters, Abuja

By the end of this month, about 34 million bank customers in Nigeria are expected to have keyed into the biometric data capture policy and have their bank verification numbers (BVN) or risk losing their accounts.

LIKE other previous policies introduced by the apex bank, the Bank Verification Number (BVN) initiative announced last year by the Central Bank of Nigeria (CBN) is yet to be accepted wholeheartedly by majority of the banking consumer public. Talk of Nigerians averse to change!

What the BVN is all about

The BVN project launched on February 14, 2014 by the immediate past CBN governor, Mallam Sanusi Lamido Sanusi, was driven at the time by the Bankers’ sub-committee on the Biometric project, with the then Managing Director/Chief Executive Officer, Zenith Bank Plc, who is now the CBN governor Mr. Godwin Emefiele as its chairman at the time of its introduction.

The objective of the BVN initiative is to protect bank customers, reduce fraud and further strengthen the Nigerian banking system.

It is the registration of customers in the financial system using biometric technology. Biometric technology involves the process of recording a person’s unique physical traits such as fingerprints and facial features. This record can then be used to correctly identify the person afterwards. Once a person’s biometrics has been properly captured, the person is given a BVN.

Fraud is reduced because no two people have the same biometric information. With the BVN, banks will be able to check the features of a person doing a transaction against the record which the bank has captured, thereby correctly identifying the owner of an account. The BVN given to a person by one bank will apply to that same person for any bank in Nigeria.

At the BVN launch, Mallam Sanusi had noted that Nigeria is the only country in the world to deploy biometrics data capture in its banks nationwide.

He had promised that within two years after the launch, Nigeria would have an industry that is efficient, saying the BVN initiative would introduce limitless opportunities in Nigeria’s financial space. “I wouldn’t want us to underestimate the significance of what we have achieved. If we make biometrics the basis of whatever we do, then it will be easier to standardise and reduce cost and make banking more efficient. We will deliver services at lower cost, enhance customer service and ensure access to cheaper credit,” he had said.

He had said that within 18 months, every single customer should have his or her biometrics taken, with an assurance that every identity would be safe.

According to the CBN, the introduction of BVN is targeted at addressing cybercrime, ATM fraud and other kinds of financial frauds, as well as safeguarding customers’ funds to avoid losses through personal identification numbers (PIN).

Aside this, the apex bank stated, “The BVN will also strengthen the current Know Your Customer guidelines and allow banks have more confidence in giving out loans. With the BVN, the financial history of a customer is stored at a central location and can be accessed by other banks who seek information about that customer.”

Also with the BVN, credit history of customers who want to secure loans is made available to banks. Customers with suspicious accounts or transactions will also be tracked with the BVN, making it difficult for fraudsters to maintain bank accounts.

To enable their customers meet up with the deadline, some banks have since late last year been offering their customers the option of enrolling on Saturday, and in addition to making the enrolment easier for the customers, the CBN, in its latest circular on the BVN, directed that for existing customers, capturing signatures and photo identification documents may not be necessary as the bank is expected to have those records during account opening.

Since its launch, the CBN and banks have been intensifying efforts to register their customers. They have also intensified efforts in sensitising all their customers on the processes of registration. Most of the banks have indulged in multiple communication channels in wooing their customers to key in. The channels include short text messages, messages displaced on their websites, e-banking platforms, ATMs and flyers placed in strategic places in banks.

The CBN and banks have also been educating customers on activities of fraudsters. Fraudsters have been sending bank customers emails, requesting them to supply personal details so they could be registered on BVN online. Thus, the banks have been educating customers that all BVN registrations are physical and done only at bank branches nationwide. “Bank customers should ensure that they do not respond to suspicious emails pretending to be from their banks and requiring them to provide sensitive information online as registration is only done at bank branches,” the CBN said.

Commenting on the BVN progress, Emefiele recently said the project would enable some of the bank customers and citizens at the lower cadre of the consumption ladder get access to banking services and credit facilities.

The CBN governor said, “This system will see the opening up of consumer credit facility and this will contribute to productivity and development of Nigeria. The banks have supported this because this is the opportunity we have been yearning for, to open up consumer credit facility. With biometrics of consumers taken, we will be comfortable to lend to customers and defaulters will be blacklisted.

“We are saying that with this project, people will be able to buy cars easily, do mortgage easily with the kind of data that would be fed into the centralised system and access bank credit easily. By extension, we would see how it would affect productivity in the economy. Given the opportunity that we have right now, where the customers’ biometric is given, it makes it comfortable for us to lend money to farmers who need money to buy fertiliser, and to cobblers, barbers, or any form of business,” he explained further.

Mr. Gunther Mull, Managing Director of Dermalog Identification Systems, the German company that was engaged to deploy and implement the BVN system, said the platform would make life easier for banks and their customers.

Already the CBN is introducing measures to make Nigerians comply with the BVN, especially high net worth individuals.

The CBN has warned that any bank customer without the number would be deemed to have inadequate know-your-customers (KYC) and this may affect his or her transactions with the bank. The regulator recently announced that from next month, banks would stop honouring transactions from N100 million and above, from customers that don’t have the BVN.

Such transactions, according to the central bank, include but are not limited to, money transfers, loans and contingencies.

The Director, Banking and Payment Department, CBN, Mr. ‘Dipo Fatokun had explained that the policy was introduced in furtherance of the regulator’s efforts to develop a safe, reliable and efficient payment system in the country.

The scheme is also expected to improve the banking system’s Know-Your-Customer (KYC) requirements as stated by the Financial Action Task Force (FATF), as well as to support innovative banking solutions, especially for retail banking.

A cross section of bank’s customers who spoke to our correspondent on the BVN initiative said they welcomed the idea. While some said they have enrolled, many others admitted they haven’t enrolled. Majority of those that haven’t enrolled said they haven’t had the time to enroll but assured they will do so before the June 2015 deadline.

Recently, the Group Managing Director/Chief Executive Officer of Fidelity Bank Plc, Mr. Nnamdi Okonkwo in a statement, accentuates this fact as he emphatically stated that the BVN programme will be used to manage the credit score of bank customers. To this end, credit report from credit bureaus, would help lenders to determine who really qualifies for a loan as identities provided by the exercise would be matched against the information. As a matter of fact, this will help check credit worthiness of borrowers as the BVN initiative will provide a centralised customer biometric information system in the banking sector which will make it difficult for people who take multiple loans with no intension of repayment to operate. There is no doubt that the activities of such people are inimical to progress in the banking sector.

Adewale Olumide, a customer with one of the new generation bank told our correspondent she hasn’t registered but she likes the idea behind the policy.

“Yes, I am aware of the policy. My bank has been telling me to register. I have seen the advert. I like the policy but I haven’t had time to register, but I will surely do so before the June deadline. I’m just a bit lazy about it,” she said.

According her, perhaps it’s just the typical syndrome of waiting till the last hour and then rushing to comply. “I believe the deadline is still far. Perhaps, when the deadline approaches, those of us who haven’t registered will rush to register. It’s not a good attitude but that’s our attitude,” she noted.

Several other banks customers said they will create time to comply before June 2015.

Meanwhile the Managing Director of Nigerian Interbank Settlement System, Mr. Ade Shonubi spoke on the ongoing bank verification number exercise and other related issues in the banking industry during an interactive session with journalists in Lagos recently confirm that the feedback from the banks is very positive.

“I think we should start by understanding why we are embarking on the BVN project, you will see that there is no way the Banks would not be enthusiastic about it. When the BVN project was initiated, there were three key areas of focus,” he said.

Expatiating, he said: “First and most important of all is for us to identify our customers uniquely across Banks and across Accounts. So, once a customer enrolls and obtains a BVN, that same BVN is tied to all his Bank Accounts. Now, relating to identifying is the possibility of Banks blacklisting people who have committed financial infractions. It could be fraudsters; it could be people who have forged documents; etc. What happens today is that Mr. A goes to Bank E, commits fraud, then runs to Bank F and because there is no way of tying all these activities across, we found out that there are quite a lot of losses related to these individuals from one Bank to another.”

Case for BVN

According to Shonubi, “BVN removes these losses. The beauty of it all is the unique identification in the financial space. Generally, people say every Nigerian is a crook but in actual sense, maybe only one per cent of Nigerians are crooks but the remaining 99 per cent are considered crooks because of that one per cent.

“So, BVN allows us, again, to find these individuals and to create that blacklists that other stakeholders in the financial space can have access to. With this, even foreigners through their Banks, may be able to identify fraudsters that have been tracked in the Nigerian Financial space. Secondly, the BVN would allow us begin to build retail credit.

“Today, the 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 employers can serve as a point of reference. There are however a lot of self-employed people as well as others working in smaller organisations who 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, how will the Banks get repayment? But with the availability of BVN, these set of individuals will also benefit from Retail Lending as identification and tracking issues will be mitigated. The third, which I have already alluded to, is we want to be able to authorise financial transactions down the road, on an Automated Teller Machine (ATM) or a Point of Sales (PoS). You can use your biometric identifier to say ‘Yes, this is me and I am authorising the payment.’ So, those are the three key focus areas that led to the BVN project being conceived and implemented.”

In the view economic analysts, as CBN implements the BVN initiative, it has 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.

Besides, they said the apex bank should also create measures to punish banks that might exploit the information they have to blackmail customers with whom they have disagreements.

While majority agree the BVN is a great initiative that would reduce illegal banking transactions and improve national financial intelligence gathering, they however suggest that the interests of account holders should be accorded importance so that their increased confidence in the banking system would improve the financial standing of banks.

According to Bamide Alo, “Customers will use banks more when they know that their transactions are safe. BVN offers vast opportunities to protect customers, banks and the entire financial system.”

The CBN, he emphasised, “should enhance the security of BVN to protect the entire financial system. It should be on the watch for technologies to keep improving BVN capacities.”