As Curtain Falls on Bank Verification Number Registration...
As the Bank Verification Number (BVN) exercise believed to hold many benefits for banks, customers and the economy as a whole draws to a close on June 30, mixed reactions have however trailed the conduct and shape of the exercise, writes Olaseni Durojaiye
Launched amidst rising cases of misdemeanors in the nation’s banking industry, many observers had welcomed the launch of the Bank Verification Number (BVN) exercise, an initiative of the Central Bank of Nigeria (CBN) and Bankers’ Committee, with high hopes and hailed it as holding the key to addressing electronic fraud cases in the industry. But as it gradually draws to the scheduled close on June 30, stakeholders have been reacting to the robustness of the exercise which is being managed by the Nigeria Inter Bank Settlement Systems (NIBBS).
At its launch on February 14, 2014, the exercise was described as an initiative that will boost financial inclusion as those who have typically stayed away from mainstream banking due to low literacy levels will be able to open and access their bank accounts using their biometric information rather than traditional identification methods. Benefits Besides benefit to customers of Deposit Money Banks (DMB), Managing Director NIBSS, Mr. Ade Shonubi, explained benefits to the BMBs in an interview to include that BVN would allow us begin to build retail credit. Today, 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 that 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. He also argued that the initiative will allow bank customers to be able to authorise financial transactions on an Automated Teller Machine (ATM) or a Point of Sales (PoS) using their biometric.
As part of efforts to boost compliance from Deposit Money Banks (DMB), the CBN had directed the banks to enrol 40 per cent of their customers on the BVN platform by December 31, 2014, and 70 per cent by March 30, 2015. A part of incentives to encourage members of the public to enrol for the exercise, the apex bank also directed banks to only honour transactions over N100 million from customers with BVN effective March 2015. Bank customers were further advised to register and get the BVN by June 30, 2015 and warned them that customers without the BVN would be deemed as having inadequate Know-Your-Customer requirement at the expiration of the deadline.
Till date, the figure of bank customers that have had their data captured could not be ascertained, 12.5 million are however believed to have been captured according to figures ascribed to the Group Managing Director and Chief Executive Officer of United Bank of Africa (UBA), Mr. Philips Oduoza, in media reports. He was also reported to have stressed that many more were expected to obtain their numbers before the deadline.
According to Managing Director of Dun Loren Merrifield Asset Management Research, Tola Odukoya, the initiative was a welcome development in the sector as it will help to check cases of fraud in the banking industry especially with the growth of electronic transactions in the country given its biometric features.
“In my opinion, it is a good initiative that will further reduce the incidence of fraud in Nigeria if it is well implemented. The growth of electronic transactions in Nigeria means there will be a consequent exposure to associated risks and the BVN, given its biometric features, will go a long way in counteracting such risks. For example, the use of biometrics to authenticate transactions in the near future is a case in point,” Odukoya stated.
Also speaking to THISDAY, another analyst and Head of Research and Intelligence, BGL Securities, Femi Ademola, hailed the initiative and highlighted some grey areas in the implementation of the policy which he insisted may determine the success rate of the initiative and which he argued can only be determined at the end of the registration phase of the initiative. The Deadline Ademola told THISDAY that “The gains of the BVN will only be known with certainty after the deadline has passed and its usage is enforced. Apart from the fact that its gives account holder a unique identity which can be used for identification in any Nigerian bank, it also links with the customers’ credit history in all banks. It therefore protects the banks from additional credit exposure to blacklisted persons,” he explained.
Continuing, he however noted “the benefit of the Bank Verification Number (BVN) to individual customers in term of its operation is not yet clear. Will customers be asked for the BVN at any time of transaction, like using a TOKEN to complete an online transaction? If somebody uses a debit or credit card to make purchases, will the person have to supply the BVN to complete the transaction? If not, how will it be different from card PIN and Token that is currently in use? It appears that the biggest gain of the BVN may be in intelligence gathering on bank customers so as to prevent the use of multiple accounts with pseudo names for money laundering activities,” Ademola stressed.
Besides the ambiguity observed by Ademola, some of the respondents to THISDAY enquiries appeared not to favour the decision to draw the curtain on the exercise as slated and called for it to be a continuous exercise arguing that if the exercise comes to an end on June 30 as advertised, it will shut out many Nigerian in the Diaspora who maintain bank accounts in the country. The implication of missing out on the exercise includes inability to access certain banking services such as foreign exchange, credit and internet banking among others.
An indication to that was made known by Oduoza, who was quoted in the media reiterating that the June 30 deadline would not be altered and added that “If you have enrolled in a bank, you don’t need another enrolment in other banks where you have accounts. You just supply the number to the other banks. If you don’t enroll, it is possible you won’t have credit, your Internet banking services will be shut down and you won’t have access to foreign exchange.” Concerns of Nigerians in the Diaspora The plan to bring the exercise to a close by June 30 has fueled concerns among Nigerians living abroad. Some of them who responded to THISDAY enquiries insisted that doing so will shut them out of the exercise and make them unable to access their local bank accounts. A few of the respondents also lamented that BVN was strange to them and maintained that the exercise lacks adequate robustness that accommodate their peculiar cases.
One of the respondents, Abi Akerele, a London resident said she was not aware of anything like BVN in any developed country. According to her, “Account holders are only given a unique bank account number and the sort code of the individual’s bank branches. However, each customer can be uniquely identified by their house addresses and landline telephone numbers. In some cases they also use chip and PIN cards and a second level verification code for online transaction,” she explained.
Nigerians in the Diaspora find company in Ademola and Odukoya. While the former called for an ingenuous platform that will take care of them, the latter advocated for the exercise to be a going concern until all bank customers are enrolled.
“I think the argument for Nigerians in the Diaspora is a very valid one. It is not economically feasible for this people to come to Nigeria because of the BVN exercise so that they can keep using their accounts. Except the banks can be ingenious enough to create a platform where customers can register for BVN on secured websites, it will be a case of shut- out for those outside of the country. In that case, the argument for a continuous exercise is a brilliant one,” Ademola asserted.
On his part, Odukoya held that “I believe it should be a continuous exercise until all Nigerians are registered. Also, I believe the enlightenment campaign should particularly highlight the key benefits for the scheme so that customers don’t see it as another burdensome administrative initiative just for the sake of it, after all we have had several data capturing and registration schemes in Nigeria and a lot of people have not seen how they have directly benefitted from them,” he stated.
Though the success rate of the exercise could not be authoritatively ascertained, industry insiders insisted that the campaign has so far recorded a success. The claim was further backed by the 12.5 million Nigerians said to have been registered during the exercise. However, others, like Ademola believed that it is too early to judge the success rate or otherwise of the exercise and argued that the success rate can only be proven after June 30 when the usage is enforced.
“It is difficult to evaluate the success of the exercise so far because of lack of statistics for now. Although most of the banks are still sending out SMS and emails to remind their customers of the coming deadline, it is not enough to determine the success of the exercise. What will give us an idea of the success rate is what happens after the deadline at the end of the month. If the deadline is shifted, it may signify that the success rate is low,” Ademola concluded.