Bank verification number: implication on the nigerian economy and banking sector

Project Abstract

The Bank Verification Number (BVN) system introduced in Nigeria has had significant implications on the economy and the banking sector. This research explores the impact of BVN in enhancing financial inclusion, reducing fraudulent activities, improving credit access, and overall economic development. The BVN has streamlined the banking system by providing a unique identifier for customers across all banks, reducing the need for multiple account holdings and enhancing transparency. The implementation of BVN has led to increased financial inclusion by enabling more individuals to access formal financial services. This has positively impacted the economy by bringing more people into the formal banking sector, allowing for better monitoring of financial transactions, and promoting a cashless economy. The reduction in fraudulent activities such as identity theft and unauthorized transactions has increased trust in the banking system, encouraging more people to use banking services. Furthermore, the BVN has improved credit access for individuals and businesses by providing a reliable means of assessing creditworthiness. Banks can now easily verify customers' identities and assess their credit history, leading to increased lending and investment opportunities. This has spurred economic growth by providing individuals and businesses with the necessary financial resources to expand their activities and contribute to the economy. In the banking sector, the BVN has revolutionized customer identification and verification processes, making it easier for banks to comply with regulatory requirements and prevent money laundering and other financial crimes. The BVN system has also facilitated interoperability among banks, enabling seamless transactions and transfers between different financial institutions. This has enhanced efficiency in the banking sector and improved overall customer experience. Overall, the BVN has had a positive impact on the Nigerian economy and banking sector by promoting financial inclusion, reducing fraud, improving credit access, and enhancing transparency. The system has facilitated economic development by bringing more people into the formal financial system, increasing access to credit, and improving the efficiency of banking operations. Moving forward, continued efforts to leverage the BVN system for innovation and expansion will be crucial in sustaining these positive outcomes and further driving economic growth in Nigeria.

Project Overview

<p> </p><p><b>INTRODUCTION</b></p><p><b>1.1 &nbsp; BACKGROUND TO THE<br>STUDY</b></p><p>The<br>role of BVN aimed at curtailing hazards associated with social security and<br>credit risk cannot be underestimated (Leland &amp; David, 1977). In recent<br>times, biometric technologies have been used to analyze human characteristics<br>as an enhanced form of authentication for real-time security processes. In the<br>face of increasing incidents of compromise on our conventional security systems<br>(password and PIN), the need for greater security on access to sensitive or<br>personal information in the Banking system becomes inevitable (Blass &amp;<br>Oved, 2003).</p><p>In<br>the same vein, the extent to which violation in the credit policies and credit<br>monitoring system weakens the financial intermediary system continue to attract<br>empirical and theoretical debate on how well Bank Verification system would<br>thwart those issues of default and scam.</p><p>In<br>addressing existing challenges with identity management, the Central Bank of<br>Nigeria, through the banker’s committee in collaboration with all Nigerian<br>banks in February 14, 2014 launched a centralized biometric identification<br>system tagged “Bank Verification Number (BVN)”.</p><p>The<br>BVN gives each Bank customer a unique identity across the Nigerian Banking<br>industry that can be used for easy identification and verification at Point of<br>Banking operations (Evangelista et al, 2001). Biometrics refers to<br>identification of an individual based on physiological or behavioural<br>attributes- fingerprint, voice, signature, facial features etc.</p><p>BVN<br>uses biometric technology to register customers in the financial system. It<br>records these physical features which are unique to individuals – fingerprints<br>and the face. The record would be used to identify the person afterwards<br>(Diamond, 1991). Once a person’s biometrics have been recorded, and BVN issued<br>the account would be accessed through BVN. The major objectives of the<br>initiative are to protect bank customers, reduce fraud and strengthen the<br>Nigerian banking system.</p><p>Biometric<br>enrolment is helpful to people who cannot read and write. Their finger prints<br>and pictures would serve the same purpose as signatures (Claudio, 2002).<br>Multiple account holders would be covered with a single registration in any of<br>the banks where they have accounts. BVN will help the banking system reduce<br>situations where loan defaulters, for instance, move from one bank to the other<br>and the banks extend new credits to them, without knowing their history. Banks<br>would be able to track transactions across all banks in Nigeria with more ease.<br>As CBN implements the BVN initiative, it has to ensure the security of the<br>data, from rogue bankers and also importantly from damage, as has been the<br>experience with other sectors that engaged in biometric enrolments. It should<br>also create measures to punish banks that might exploit the information they<br>have to blackmail customers with whom they have disagreements.</p><p>Customers<br>Bank Accounts are protected from unauthorized access with the use of BVN.<br>Through an enhanced biometric real-time security system, the danger of<br>unauthorized access to customer’s bank account is brought under check. The BVN<br>is encompassing in detecting fraud of whatever type, whether through<br>unauthorized access or through illegally authorized forms, and any other forms<br>of fraud that’s against the rule of law and social justice (De Meza &amp; David,<br>2000).</p><p>It<br>will be of great benefit to Nigerian economy as she undertakes a means to<br>effective transaction delivery through the BVN irrespective of diversities in<br>opinions, critics and shortcomings that may ensue in actualization of this<br>project. With BVN, Customers who borrow from one bank and default would not go<br>to another bank to borrow without being tracked due to a unified credit<br>performance system as Credit Bureau and lenders would be able to effect ‘’Know<br>Your Customer (KYC)’’ policy by the CBN and fraudulent activities would be<br>curtailed and banking activities would be monitored appropriately.</p><p><b>1.2 &nbsp; STATEMENT OF THE<br>PROBLEM</b></p><p>BVN<br>is a great initiative that would reduce illegal banking transactions and<br>improve national financial intelligence gathering which will boost the economy.<br>The interests of account holders should be accorded importance so that their<br>increased confidence in the banking system would improve the financial standing<br>of banks. Customers will use banks more when they know that their transactions<br>are safe. BVN offers vast opportunities to protect customers, banks and the<br>entire financial system. However, the researcher is examining the implication<br>of Bank verification number BVN on the Nigerian economy and banking sector.</p><p><b>1.3 &nbsp; OBJECTIVES OF THE<br>STUDY</b></p><p>The<br>following are the objectives of this study:</p><p>To<br>examine the implication of Bank Verification Number BVN on the Nigerian<br>economy.</p><p>To<br>examine the implication of Bank Verification Number BVN on the Nigerian banking<br>sector.</p><p>To<br>determine the threats and weaknesses of the implementation of Bank Verification<br>Number BVN.</p><p><b>1.4 &nbsp; RESEARCH QUESTIONS</b></p><p>What<br>is the implication of Bank Verification Number BVN on the Nigerian economy?</p><p>What<br>is the implication of Bank Verification Number BVN on the Nigerian banking<br>sector?</p><p>What<br>are the threats and weaknesses of the implementation of Bank Verification<br>Number BVN?</p><p><b>1.5 &nbsp; HYPOTHESIS</b></p><p>HO:<br>There is no significant relationship between Bank Verification Number and the<br>Nigerian economy</p><p>HA:<br>There is significant relationship between Bank Verification Number and the<br>Nigerian economy</p><p><b>1.6 &nbsp; SIGNIFICANCE OF THE<br>STUDY</b></p><p>The<br>following are the significance of this study:</p><p>The<br>outcome of this study will educate the general public on the benefits and<br>implications of Bank Verification Number and it effect on the Nigerian economy<br>and the banking sector.</p><p>This<br>research will be a contribution to the body of literature in the area of the<br>effect of personality trait on student’s academic performance, thereby<br>constituting the empirical literature for future research in the subject area.</p><p><b>1.7 &nbsp; SCOPE/LIMITATIONS<br>OF THE STUDY</b></p><p>This<br>study will cover the issues of Bank Verification Number and its implication on<br>the Nigerian economy and the banking sector</p><p><b>LIMITATION OF STUDY</b></p><p>Financial<br>constraint- Insufficient fund tends to impede the efficiency of the researcher<br>in sourcing for the relevant materials, literature or information and in the<br>process of data collection (internet, questionnaire and interview).</p><p>&nbsp;Time<br>constraint- The researcher will simultaneously engage in this study with other<br>academic work. This consequently will cut down on the time devoted for the<br>research work</p> <br><p></p>