Project Abstract

Abstract
The Bank Verification Number (BVN) implementation in the Nigerian banking sector has had significant implications on the economy and the banking industry. This research project aims to explore the impacts of BVN on the Nigerian economy and banking sector. The BVN was introduced by the Central Bank of Nigeria in 2014 to create a centralized biometric database of bank customers in order to enhance the security of banking transactions and reduce fraudulent activities. The BVN has led to increased financial inclusion in Nigeria by ensuring that more individuals have access to formal financial services. This has helped to deepen the financial sector and promote economic growth by bringing unbanked individuals into the formal banking system. Additionally, the BVN has improved the efficiency of banking operations by providing a unique identification system that allows for seamless transactions across different banks. Furthermore, the BVN has contributed to the reduction of financial crimes such as identity theft, money laundering, and fraud in the banking sector. By linking customers' biometric data to their bank accounts, the BVN has made it more difficult for criminals to engage in illicit financial activities. This has enhanced the overall integrity of the banking system and increased public trust in the financial sector. The implementation of the BVN has also had implications for the regulatory environment in Nigeria. Regulators now have access to a comprehensive database of bank customers, which allows for better monitoring of financial transactions and compliance with anti-money laundering regulations. This has helped to strengthen the regulatory framework in the country and improve the overall stability of the financial system. In conclusion, the Bank Verification Number has had far-reaching implications on the Nigerian economy and banking sector. It has promoted financial inclusion, enhanced security, improved efficiency, and strengthened regulatory oversight. Moving forward, it will be important for policymakers and industry stakeholders to continue to leverage the BVN system to further drive financial sector development and economic growth in Nigeria.

Project 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