The Bank Verification Number, BVN as it is fondly referred to in Nigeria has grown over the years, and through its evolutionary stages have surmounted some challenges arising from user acceptance, user adoption, and I can say with some confidence that it is still at the growth stage in its life cycle.
In this short piece, we look at the reasons for the establishment of the BVN by the Central Bank of Nigeria (CBN), its uses, advantages, disadvantages, lingering challenges, and possibilities for future use.
The CBN in an effort to revolutionize the Nigerian banking and payment systems, established the law mandating the registration of BVN by all Nigerian account holders in 2014. This was targeted towards integrating the database, serving as a one-stop shop for information concerning individuals, entities (uncovering the ‘veil’ of corporations through the knowledge of the personalities serving as account signatories and by extension her directors), by having ‘a single identity in the financial system’.
A common example is as seen in the Bureau De Change (BDC) industry where there was a clamp-down on multiple directorship of BDC companies which has led to the sanitization of the BDC industry between 2014 and 2016. Also, very related to this is the introduction of the Treasury Single Account (TSA) established by CBN to ensure an adequate monitoring and reporting by public corporations, curbing multiplicity of accounting records by public officers, hence serving as a tool for reducing corruption.
BVN registration has faced several challenges with issues arising from insufficient designated registration centres, to non-functional tools and equipment used for the registration and enrolment process. As at present, it is estimated that only about 31 million out of the about 200 million people living in Nigeria have been registered in the BVN database. About 44 million accounts have been linked with BVN. This implies that about 155 million persons in Nigeria are either underbanked or unbanked (considering other demographic factors such as age).
The BVN registration equipment includes the biometric (fingerprint) machine, the camera (facial recognition equipment), and a valid ID card (whose availability sometimes poses a serious challenge), all linked to the central database at NIBBS (Nigeria Interbank Settlement System). The enrollment process involves the capturing of biometric data through use of these equipment, and an additional input of other pertinent information such as demographic details (name, age, gender, and marital status); contact details (physical address), email address, and telephone number.
As stipulated by CBN, accounts not having BVN information is to be placed on PND (Post No Debit) status by bank authorities, with a mandate not to allow debit transactions until the correct BVN information has been linked to such accounts.
Current uses of BVN include:
1. Improved KYC (Know Your Customer) process in the banking sector.
2. Increases access, convenience and service levels across the banking industry.
3. Serves as an enabler for financial inclusion and integration of financial services to the economy. This could be further deepened using its mobile enrolment methods, as is done for PEPs (Politically Exposed Persons) and HNIs (High Net worth Individuals).
4. Enabling tracking and reporting of fraudsters in the Nigerian banking industry. Application of which include the rendition of suspicious transactions reporting (STRs) to NFIU (Nigerian Financial Intelligence Unit), accounts closed for reasons attributed to BVN issues, and watch-listed BVNs.
Sources of watch-listed BVN include NIBBS, Interswitch, banks, other financial institutions including Micro Finance Institutions (MFIs), Mortgage Institutions, CBN, EFCC, The Nigeria Police Force.
5. Banking transactions including personal and third-party transactions, foreign exchange (FX) transactions, and bank card transactions.
However, several recurrent issues arising from the defects of this technology include but are not limited to:
1. Challenges of BVN linkage to already opened accounts, including accounts returning to PND status even after been previously linked.
2. Multiple registration by individuals resulting in several bottlenecks to account linkage. Related to this is the instruction from the bankers’ committee that no BVN update shall be allowed for BVN enrolled in other banks. BVN updates include name change, correction of name spelling errors, and change in civil status.
3. Registration of rural population (underbanked and unbanked population).
4. Inaccurate enrolment process arising primarily from wrong capturing of biometric information.
5. Insufficient registration centres especially for Nigerians in the diaspora, aside the VFS Global enrolment centres, OIS Services enrolment centres, and some other authorized official registration points across the globe.
In the meantime, some uses of this technology have been seen in its ability to be used as effective tracking tools by authorities through the effective monitoring of account/transactional information at the NIBBS central database. Hence, authorities could distill BVN-specific information in tracking individuals both locally and internationally as observed in a recent CBN rule establishing a limit to international (foreign exchange) transactions. However, I propose that adequate legal frameworks should be put in place to protect citizens from undue infringements arising from unauthorized breaches that could occur from this type of leaks of private and confidential information.
As an enthusiast of the tech world, amidst the plethora of issues still been faced by the evolution of the BVN technology, I must state however that it still has unlimited potentials in solidifying the framework of the Nigerian ecosystem. Its potential applications could even extend beyond the financial space and serve as a versatile and effective tool for nation building. Its potential applications include but not limited to:
1. Use as a Nigerian Social Security Number, or a Social Insurance Number, as practiced in USA and Canada. This almost automatically tracks births, deaths and other quantitative information required by statistical institutions.
This serves as a tool for government forecasting and planning through effective and efficient record keeping. Alternatively, it could be used by insurance practitioners in elevating this sector of the economy by finding various possible applications.
2. Use as a tool for electioneering processes using the interoperability already provided by switching companies, thus ensuring a seamless linkage to the election database, ensuring proper transparency, efficiency and waste reduction in the election process.
3. Saves government millions of Naira arising from duplication of efforts by several ‘analog’ agencies, which are not positioned for the challenges and opportunities of the decades ahead.
4. Credit agencies (and indeed other agencies) could also elicit valuable data and information by conducting proper analysis on telephone numbers connected to BVN enrolment information. As has been the case, telecommunications services providers (telcos) would act as reliable stakeholders in ensuring the reliability of the process and information captured during SIM registration processes across the country.
5. Extensive applications in the financial industry from KYC, to credit approvals, loan disbursement, monitoring and risk control processes. This information could be shared amongst financial institutions for curbing serial loan defaulters, and high-risk individuals. The data harnessed from consumer behavior could also be used in targeted product development efforts.
6. Deepening financial inclusion through MFIs and enhancing mortgage financing and its accessibility for the average Nigerian.
It must be noted that these possibilities are open and subject to criticisms to produce better outputs that are applicable to the Nigerian situation, without undermining the fundamental issues of development of the Nigerian state.
But as is the case in all development related issues in Nigeria: when would government across all levels look at these potential applications of the BVN data for nation building? This raw data in all its hidden beauty could change the trajectory of future development in Nigeria.
God Bless Nigeria!