Thesis Abstract

Abstract
The Bank Verification Number (BVN) system was introduced in Nigeria to provide a biometric identification for bank customers in order to enhance the security of the banking system and curb financial fraud. This research delves into the implications of the BVN system on the Nigerian economy and banking sector. The study examines the impact of the BVN on reducing financial fraud, improving KYC compliance, enhancing financial inclusion, and increasing the efficiency of banking operations. The BVN system has significantly contributed to reducing financial fraud in the Nigerian banking sector by providing a unique identifier for each bank customer. This has made it more difficult for fraudsters to carry out unauthorized transactions and impersonate account holders. The biometric data linked to the BVN also helps in verifying the identities of customers, thereby improving Know Your Customer (KYC) compliance and reducing the risks associated with money laundering and terrorist financing. Furthermore, the BVN system has played a crucial role in enhancing financial inclusion in Nigeria by enabling more individuals to access formal financial services. With a BVN, individuals can easily open bank accounts, access credit facilities, and engage in electronic payment transactions. This has helped to bring more people into the formal banking sector, reducing the reliance on cash transactions and promoting financial literacy among the unbanked population. Moreover, the BVN system has increased the efficiency of banking operations in Nigeria by providing a centralized database of bank customers' information. This has enabled banks to easily verify customers' identities, conduct due diligence checks, and streamline their processes for account opening and transactions. The BVN system has also facilitated the implementation of innovative banking services such as mobile banking, internet banking, and electronic fund transfers, improving the overall customer experience and convenience. In conclusion, the Bank Verification Number (BVN) system has had a positive impact on the Nigerian economy and banking sector by reducing financial fraud, enhancing KYC compliance, promoting financial inclusion, and improving the efficiency of banking operations. However, there is a need for continuous monitoring and evaluation of the BVN system to address emerging challenges and ensure its sustainability in the rapidly evolving financial landscape of Nigeria.

Thesis Overview

INTRODUCTION

1.1   BACKGROUND TO THE
STUDY

The
role of BVN aimed at curtailing hazards associated with social security and
credit risk cannot be underestimated (Leland & David, 1977). 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 (Blass &
Oved, 2003).

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 (Evangelista et al, 2001). Biometrics refers to
identification of an individual based on physiological or behavioural
attributes- fingerprint, voice, signature, facial features etc.

BVN
uses biometric technology to register customers in the financial system. It
records these physical features which are unique to individuals – fingerprints
and the face. The record would be used to identify the person afterwards
(Diamond, 1991). Once a person’s biometrics have been recorded, and BVN issued
the account would be accessed through BVN. The major objectives of the
initiative are to protect bank customers, reduce fraud and strengthen the
Nigerian banking system.

Biometric
enrolment is helpful to people who cannot read and write. Their finger prints
and pictures would serve the same purpose as signatures (Claudio, 2002).
Multiple account holders would be covered with a single registration in any of
the banks where they have accounts. BVN will help the banking system reduce
situations where loan defaulters, for instance, move from one bank to the other
and the banks extend new credits to them, without knowing their history. Banks
would be able to track transactions across all banks in Nigeria with more ease.
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. It should
also create measures to punish banks that might exploit the information they
have to blackmail customers with whom they have disagreements.

Customers
Bank Accounts are protected from unauthorized access with the use of BVN.
Through an enhanced biometric real-time security system, the danger of
unauthorized access to customer’s bank account is brought under check. 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 (De Meza & David,
2000).

It
will be of great benefit to Nigerian economy 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.

1.2   STATEMENT OF THE
PROBLEM

BVN
is a great initiative that would reduce illegal banking transactions and
improve national financial intelligence gathering which will boost the economy.
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. 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. However, the researcher is examining the implication
of Bank verification number BVN on the Nigerian economy and banking sector.

1.3   OBJECTIVES OF THE
STUDY

The
following are the objectives of this study:

To
examine the implication of Bank Verification Number BVN on the Nigerian
economy.

To
examine the implication of Bank Verification Number BVN on the Nigerian banking
sector.

To
determine the threats and weaknesses of the implementation of Bank Verification
Number BVN.

1.4   RESEARCH QUESTIONS

What
is the implication of Bank Verification Number BVN on the Nigerian economy?

What
is the implication of Bank Verification Number BVN on the Nigerian banking
sector?

What
are the threats and weaknesses of the implementation of Bank Verification
Number BVN?

1.5   HYPOTHESIS

HO:
There is no significant relationship between Bank Verification Number and the
Nigerian economy

HA:
There is significant relationship between Bank Verification Number and the
Nigerian economy

1.6   SIGNIFICANCE OF THE
STUDY

The
following are the significance of this study:

The
outcome of this study will educate the general public on the benefits and
implications of Bank Verification Number and it effect on the Nigerian economy
and the banking sector.

This
research will be a contribution to the body of literature in the area of the
effect of personality trait on student’s academic performance, thereby
constituting the empirical literature for future research in the subject area.

1.7   SCOPE/LIMITATIONS
OF THE STUDY

This
study will cover the issues of Bank Verification Number and its implication on
the Nigerian economy and the banking sector

LIMITATION OF STUDY

Financial
constraint- Insufficient fund tends to impede the efficiency of the researcher
in sourcing for the relevant materials, literature or information and in the
process of data collection (internet, questionnaire and interview).

 Time
constraint- The researcher will simultaneously engage in this study with other
academic work. This consequently will cut down on the time devoted for the
research work