BVN: The issues and rationale

THE Bank Verification Number (BVN), a project initiated by the Central Bank of Nigeria (CBN), has at various times, become different things to different people and currently may not have enjoyed the cooperation it deserved. For many who saw the scheme from the point of collection of biometrics only, it was a duplication of efforts. For others who dwelled on the processes, it was a waste of time.

  But a little consideration on the flip side of the issue may reveal more on the initiative. It was scripted solely for banks’ customers and of course, the general public, who may at one time or the other, have transaction-related issues within the financial system.

  There is no gainsaying that concerns about bank-related frauds are often part of the news menu in recent years, with some involving millions at once and hitting billions in aggregation. At one point, the Nigeria Electronic Fraud Forum even raised the alarm that the development is capable of wiping out the entire profit of a single bank.

  Besides, the emergence of a revolutionized payments system in the country quickened the pace of financial transactions, as well as windows for fraudsters who are bent on exploiting development initiatives to perpetrate their fraudulent activities, especially on accounts operated by their unsuspecting victims.

  Indeed, security of valuable, particularly depositors’ funds, is first in banking as it would establish or restore and sustain confidence in the system. The apex bank through the Bankers’ Committee, Deposit Money Banks and Nigeria Interbank-Settlement System (NIBSS) initiated this project, whereby a centralised biometric identification system would serve the industry as a whole, but first collected by individual banks.

  The BVN project therefore, sought to identify a bank customer based on physiological or behavioural attributes like fingerprint, facial features, signature and others, which would be accepted as a means of identification across the industry. The latest trajectory became imperative as the incidence of compromise on conventional security systems- password and Personal Identification Number (PIN) of customers become recurring decimal.

  The exercise, which is riding on the back of the biometric project CBN started with the Bankers’ Committee, Dermalog and Charms Plc would now ultimately assign a unique BVN once a person’s biometrics have been properly captured.

  It is worth reiterating that the objectives of the BVN initiative are to protect bank customers, reduce fraud and further strengthen the Nigerian banking system. Of course, it would be anti-dote to fraud because no two individuals have the same biometrics and banks will therefore, be able to check the features of a person doing a transaction against the record, which it has captured, thereby correctly identifying the owner of an account.

  The BVN enables each individual to have one identification within the financial system and gives each customer maximum protection and security of transactions. It will help the banking system identify customers who have been blacklisted by one bank, who also move to other banks perpetrating such fraudulent activity. Also, because it captures physical features, it is very helpful for people who cannot read and write, thereby making sure that everyone is included in the financial system.

  The initiative was scripted to tow the mode of the pilot run of cash-less policy, as it started in Lagos, with no fewer than 1000 of the 1401 branch network of the nation’s deposit money banks in the state. This started since March 2014.

  The apex bank called the scheme a game changer as it continues to reassure that BVN project, through the biometric capturing, was anchored on the need to reduce to barest minimum, incidences of fraud, identity theft, enhance credit risk management and financial inclusion. Individual banks will have a database of their customers shared across their branch network, while the Nigeria Inter-Bank Settlement System (NIBSS) will host the industry-wide database, and made up of all the customers of the nation’s lenders.

  This would mean that new account openings from all the banks would be cleared first from NIBSS database, as a foil to identity theft, fraud and multiple identities, while transactions on accounts not registered would trigger alerts and banks which are involved would be treated as aiding fraudulent activities in the banking system.

  Also, in the long run, biometric system will replace various identification modes currently used in the banking industry, which require fresh data collection at various banks for opening of new accounts.

 NIBSS, which is the partner in the project, has called for the cooperation of all stakeholders- banks, customers and well meaning Nigerians to achieve the desired goals, adding that there was need to protect legitimate businesses and mitigate frauds to sustain confidence in the industry.

  NIBSS had pointed out that the project does not conflict with the NUBAN scheme (the new account number initiative undertaken recently), as both serve different purposes. It also said that it does not conflict with the national identity project, adding that already, the National Identity Management Company have worked out a model of mutual cooperation for the BVN scheme.

  The full integration of BVN provides standardized efficiency of banking operation. This means that all banking operations will be verified using the same method, reducing cases of human error or inconsistency. The full implementation of BVN would mean transaction authentication without the use of cards, but instead, use of only biometrics and a PIN.

  For the sake of emphasis, all bank customers in Nigeria are required to register or enroll for a BVN, as the deadline for existing customers to comply ahead of some restrictions for non-compliance has been slated for July 1, 2015.

 The Bankers’ Committee recently intensified enrolment of customers on the BVN scheme, which it rated its pace of penetration as low.

  But as part of efforts to encourage enrolment on the BVN and underscore its imperativeness, the CBN directed banks to only honour transactions over N100 million from customers with BVN from March 2015. Such transactions according to the apex bank include, but not limited to, money transfers, loans, and contingencies, among others.

  The CBN, which also urged all bank customers to register for their BVN by June 2015, has warned that any bank customer without a BVN would be deemed to have inadequate know-your-customers by that date.    

  But a new call has been made for customers to avoid the traps of fraudsters in the process of registration. Specifically, CBN has reiterated that to enroll, bank customers must visit a branch of their bank. This means that it is only in the bank that the registration will take place, not online.

  “The Bank Verification Number given to a person by one bank will apply to that same person for any bank in Nigeria. Banks’ customers should ensure that they do not respond to suspicious emails pretending to be from their bank and requiring them to provide sensitive information online. Customers should contact their bank directly if in doubt about how to enroll for their BVN,” a statement said.

  The enrollment process seems to be easy as customers are expected to walk into any branch of their bank, fill and submit the BVN enrolment form and also do data capturing like as fingerprint, facial features. An acknowledgment slip with the transaction identity will be issued to the customer and within 24 hours that the system confirmed the application, the BVN is generated, and SMS is sent to the customer for pickup.

  A customer can only enroll once, while his BVN will be linked to all his bank accounts across Nigerian banks. At the point of the enrolment however, individuals shall be required to submit an acceptable means of identification and update their information at the bank branch physically. 

  For corporate accounts, it is only the signatory to the accounts that are captured, not directors of the company, as the directors are not functional users of the accounts.

The CBN Governor, Godwin Emefiele, who before his appointment was, also Chairman, Bankers’ Committee Sub-Committee on Biometrics, believes the project is ambitious and will revolutionalise banking.

  According to him, the project would lead to re-setting of credit standards in the banking sector, as well as enhance consumer credit.

“It is a rare opportunity that needed to be embraced. This project has capacity to serve over 160 million people. The good thing is that even when one forgets his/her Personal Identification Number (PIN), once the information is verified, transactions can be done.”