THE EFFECT OF BVN (BANK VERIFICATION NUMBER) ON SOCIAL SECURITY AND CREDIT RISK
OLAOLUWA .F. ONAOLAPO
The role of BVN aimed at curtailing hazards associated with social security and credit risk cannot be underestimated. In recent times, biometric technologies have been used to analyze human characteristics as an enhanced form of authentication for real-time security processes. In the face of increasing incidents of compromise on our conventional security systems (password and PIN), the need for greater security on access to sensitive or personal information in the Banking system becomes inevitable.
In the same vein, the extent to which violation in the credit policies and credit monitoring system weakens the financial intermediary system continue to attract empirical and theoretical debate on how well Bank Verification system would thwart those issues of default and scam.
In addressing existing challenges with identity management, the Central Bank of Nigeria, through the banker’s committee in collaboration with all Nigerian banks in February 14, 2014 launched a centralized biometric identification system tagged “Bank Verification Number (BVN)”.
The BVN gives each Bank customer a unique identity across the Nigerian Banking industry that can be used for easy identification and verification at Point of Banking operations. Biometrics refers to identification of an individual based on physiological or behavioural attributes- fingerprint, voice, signature, facial features etc.
The roles through which the BVN enhances the operations of the banking system are listed below:
• BVN gives a unique identity that can be verified across the Nigerian Banking Industry (not peculiar to one Bank)
Irrespective of the account name, number or bank name, the BVN summarizes the total number of accounts owned by a single individual under a particularly assigned Number (BVN). As all banks have access to all customers’ details; as such litigating against fraud in most cases.
• Customers Bank Accounts are protected from unauthorized access.
Through an enhanced biometric real-time security system, the danger of unauthorized access to customer’s bank account is brought under check.
• It will address issues of identity theft, thus reduce exposure to fraud
The BVN is encompassing in detecting fraud of whatever type, whether through unauthorized access or through illegally authorized forms, and any other forms of fraud that’s against the rule of law and social justice.
• The BVN will enhance the Banking Industry chances of being able to fish out blacklisted customers
Since all banks have access to the database of the BVN of all customers, the statistics detailing the bio data of all customers in relations to their banks accounts automatically assist the bank operatives in identifying blacklisted customer’s and stop them from engaging in unlawful activities that has damaging consequences.
• Reduce queue in Banking Halls.
With one number assigned to every customer irrespective of the number of account owned, it is anticipated that that queue should reduce since one authentication will be required for all the accounts. Account verification would thereby transform to a more automatic process.
• Standardized efficiency of Banking operations
Through queue reduction, potential threat of fraud identified, money laundering brought under check, unauthorized access denied, and the anticipated standardized efficiency of banking operations in Nigeria will be achieved among others.
• The Customers unique BVN is accepted as a means of identification across ALL Nigerian Banks
The generality of banking operation across the nation is central to the introduction of BVN such that there is no inducement on the part of any economic agent; customers, bank officials or third to engage in unlawful act. The operations of bank become almost identical. Also the CBN can adopt a near general approach in evaluating the performances of the commercial banks when their operations are similar.
• The customers BVN allow them to have access to future credit facilities.
The bank wants to invest their fund in investment deem to have little or zero risk attached. The aim is toward profit maximization; as such the bank will be willing to issue loans to customer whom they can predict the outcome of their activities which has been ascertained through the BVN.
From the inception of this Verification system, the debate has been to ascertain the extent to which fraud would be prevented, a valid credit monitoring system would be ensured as well as tax compliance.
The system felt the need to build a more solidified system to integrate, coalesce and synchronize the credit system such that the credit appraisal procedures of banks would be strengthened, a common database of customer information would enable lenders to determine credit worthiness and the ability to detect blacklisted customers and fraud would be detected among others.
The role of BVN is aimed at militating against fraud and enhancing banking operations, yet it has certain shortcomings that could be of threat to socio-economic growth and development. These effects of BVN are highlighted below:
• Vulnerability: From the Economist point of view, the cost of implementing this project may seem far beyond the quality of delivery as security is posed to a threat of privacy and technical vulnerability as it happened in the past with a similar case of identification with the National Identity Management Systems (NIMC).
• Many people may decide to shun the process of verification due to their narrow mindedness and understanding, and can even decide not to put their money in banks. This has an effect on liquidity and the ability of cash inflow to effect credit possibility.
• Reliability: With the recent presidential election conducted where the verification system found it difficult to accredit real people, the same might be the case and all what people see as an innovation can end up being a crack in the wall.
In conclusion, it will be of great benefit to Nigeria as she undertakes a means to effective transaction delivery through the BVN irrespective of diversities in opinions, critics and shortcomings that may ensue in actualization of this project. With BVN, Customers who borrow from one bank and default would not go to another bank to borrow without being tracked due to a unified credit performance system as Credit Bureau and lenders would be able to effect ‘’Know Your Customer (KYC)’’ policy by the CBN and fraudulent activities would be curtailed and banking activities would be monitored appropriately.
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