Impact of bvn on financial security in nigeria banks

Project Abstract

The Bank Verification Number (BVN) system was introduced in Nigeria in 2014 with the aim of enhancing the security of customers' accounts in the banking sector. This study investigates the impact of BVN on financial security in Nigerian banks. The research employs a mixed-methods approach, combining quantitative analysis of financial data with qualitative interviews with bank customers and staff. The quantitative analysis examines trends in financial fraud, identity theft, and unauthorized transactions before and after the implementation of BVN. The findings suggest a significant reduction in these security breaches following the introduction of BVN, indicating its effectiveness in improving financial security in Nigerian banks. Additionally, the study assesses the cost-effectiveness of the BVN system by comparing the financial losses incurred by banks due to security breaches before and after its implementation. Complementing the quantitative analysis, qualitative interviews provide insights into the experiences and perceptions of bank customers and staff regarding the impact of BVN on financial security. Customers report feeling more secure knowing that their accounts are protected by the BVN system, which has increased their trust in the banking sector. Bank staff acknowledge the challenges of implementing BVN but recognize its overall benefits in reducing fraud and enhancing customer confidence. Furthermore, the study explores the implications of BVN for financial inclusion in Nigeria. While concerns have been raised about potential barriers to access for unbanked individuals, the research findings suggest that BVN has not significantly hindered financial inclusion efforts. Instead, it has bolstered the credibility of the banking sector, attracting more individuals to open bank accounts and participate in formal financial services. Overall, this research contributes to the growing body of literature on financial security in developing countries and the role of technology in enhancing security measures. The findings highlight the positive impact of BVN on reducing fraud and improving customer trust in Nigerian banks. The study also underscores the importance of continuous monitoring and evaluation of security systems to adapt to evolving threats and ensure the long-term sustainability of financial security measures.

Project Overview

<p> <b></b></p><p><b><b>1.0<br>INTRODUCTION</b></b></p><p><b><b></b></b></p><b><b><p><b>1.1<br>BACKGROUND OF STUDY</b></p><p><b></b></p><b><p>The<br>rate at which fraudulent activities is going on in the country these days is<br>becoming unbearable; the federal government of Nigeria and the CBN have being<br>on their toes to resolve the issue of frauds and to boost financial security in<br>most of the Nigerian banking industry; because of all these issues the central<br>bank of Nigeria on february, 2014 made it compulsory that all account holders<br>should have a bank verification number so as to enable the account holder to<br>have a single identity in all the banks in Nigeria; all he or she need to do is<br>to link it with his or her accounts.</p><p>The<br>essence of this system is to help the bank in the protection of their customers<br>from theft and other financial/ economic crimes growing in the banking industry<br>(orji, 2014)</p><p>The<br>Bank Verification Nlumber (BVN) is a great step taken by the Central Bank of<br>Nigeria, to strengthen the financial security and order in the banking sector<br>of Nigeria. One of the importance of the BVN is that transactions will be safer<br>once all protocol is duely observed. The essence of this BVN exercise is to ensure<br>that bank transactions are safer and fraudulent transactions are minimized, if<br>not totally eliminated. The central bank of Nigeria have put in alot of effort<br>to see the success of this excercise, but the general public do not know the<br>importance of the bank verification number; but they started seeing the<br>importance of the bank verification number when the cental bank made it clear<br>that the excercise will stop by october 2015.</p><p>The bank verification number system<br>uses biometric technology to register customers in the banking sector. It<br>records these physical features which are unique to individuals fingerprints<br>and the face; this techniques was made effective because every individual has<br>his or her own unique finger prints. The record would be used to identify the<br>person afterwards. Once a person’s biometrics have been recorded, and BVN<br>issued 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 enrolment is helpful to<br>people who cannot read and write. Their finger prints and pictures would serve<br>the same purpose as signatures. Multiple account holders would be covered with<br>a single registration in any of the banks where they have accounts.</p><p>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. <br>Banks would be able to track transactions across all banks in Nigeria with more<br>ease.</p><p><b>1.2<br>STATEMENT OF THE PROBLEM</b></p><p><b></b></p><b><p>Without<br>doubts, the Nigerian banking sector has contributed to the growth and<br>development of the Nigeria. The Nigerian banking sector has maintained the<br>inflow of money in the country so as to stabilize the country’s economy. According<br>to Udenze, 2014; stated that growth in this sector has been reduced due to high<br>cases of economic and financial crimes; fraud and money laundry have significant<br>effect on the financial security in the Nigeria banking industry. They have<br>caused damage to the reputation of the image of the country, loss of FDI, poor<br>infrastructural devel­opment, dwindling confidence and distortions in our<br>political as well as financial systems, among other things.</p><p>In<br>view of these crises crimes perpetuated by cyber thieves, the mandatory bank<br>verification number exercise embarked by various banks nationwide has also<br>caused congestions in banking halls. Although the exercise commenced since<br>February, 2014, the fire brigade approach of most Nigerians has warranted most<br>bank halls to be filled to its maximum capacity. Queues in some banks even<br>extended outside the banking hall. This development has caused confusion in<br>some banking halls as other transactions are placed on hold due to inadequate<br>staff to attend to clients or delayed indefinitely.</p><p><b>1.3 RESEARCH OBJECTIVES</b></p><p><b></b></p><b><p>The<br>main object of the research work is to elicit information on the impact of BVN<br>on financial security in Nigerian Banks. Specific objectives of the study are:</p><p>1. To<br>monitor effect of the bank verification number on the level of financial crimes<br>in Nigeria</p><p>2. To<br>give everyone access to a single account</p><p>3. To<br>help limit multiple account by a single owner.</p><p>4. To<br>investigate the role of the central bank of Nigeria in the implementation of<br>the bank verification number system</p><p>5. To<br>investigate the impact of bank verification number system on the level of<br>financial safety in the Nigerian banks</p><p><b>1.4 RESEARCH QUESTIONS</b></p><p><b></b></p><b><p>1.<br>What are effects of the bank verification number on the level of financial<br>crimes in Nigeria?</p><p>2.<br>What is the impact of bank verification number system on the level of financial<br>safety in the Nigerian banks?</p><p>3.<br>What are roles of the central bank of Nigeria in the implementation of the bank<br>verification number system?</p><p><b>1.5 RESEARCH HYPOTHESIS</b></p><p><b></b></p><b><p><b>H0:</b><br>The introduction of BVN has no significant effect on financial security</p><p><b>H1:</b><br>The introduction of BVN has significant effect on financial security</p><p><b>H0:</b><br>There is no significant relationship between BVN and the level of congestion in<br>the bank</p><p><b>H1:</b><br>There is significant relationship between BVN and the level of congestion in<br>the bank</p><p><b>1.6 SIGNIFICANCE OF THE<br>STUDY &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; </b></p><p><b></b></p><b><p>The<br>research work is a very important one as it will investigate the role of the<br>central bank of Nigeria in the implementation of the bank verification number<br>system, the study will discuss the importance of bank verification number, the<br>bank verification number initiatives will help limit everyone to single account<br>so as to monitor the level of financial crimes in Nigeria. The study will also<br>discuss the role of the central bank of Nigeria in the implementation of bank<br>verification number system. Finally the study will discuss the role of bank<br>verification number on the level of security.</p><p><b>1.7 SCOPE OF STUDY</b></p><p><b></b></p><b><p>The<br>research work is limited to the study of the impact of BVN on financial<br>security in Nigeria banks.</p><p><b>1.8 LIMITATION OF STUDY</b></p><p><b></b></p><b><p><b>FINANCIAL CONSTRAINTS</b>:<br>insufficient finance has made the research unable to get all the necessary<br>materials needed for the purpose of the research work but the researcher was<br>able to make do with the materials available to get meaningful information<br>concerning the research topic</p><p><b>TIME CONSTRAINTS</b>:<br>the researcher being a student is involved in other departmental activities<br>like seminar presentation and assignments but was able to meet up with the time<br>allocated for the completion of the research work</p><p><b>1.9 DEFINITION OF TERMS</b></p><p><b></b></p><b><p><b>BVN: </b>Bank<br>Verification Number</p><p><b>CBN</b>: Central Bank<br>of Nigeria</p><p><b>Biometrics</b>:<br>Biometrics refers to identification of an individual based on physiological<br>attributes- fingerprint, voice, facial features etc.</p><p><b>REFERENCES</b></p><p><b></b></p><b><p><i></i></p><i><p>Orji, V, O. (2015).<i>Knowledge management systems: Issues,</i></p><p><i></i></p><i><p><i>challenges, and benefits</i>. Communications of the Association for Information Systems, 1(7).</p></i></i></b></b></b></b></b></b></b></b></b></b></b></b> <br><p></p>