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Biometric Verification Number: Reality and benefits

By Babajide Komolafe

Customers besiege banks as BVN registration deadlines expires
Customers besiege banks as BVN registration deadlines expires

What is this Biometric Verification Number (BVN) all about?  What are the benefits to bank customers and the economy? These are the questions agitating the minds of many Nigerians, which were also expressed in some of the responses to the series on, “BVN: facts behind the extension”.

The first reality about the BVN is that it is a response to the problem of identity crisis in the banking industry. For many reasons, banks are mandated to “Know Your Customers” (KYC). They are expected to know where the customer lives, what he does etc. Among other things, the aim of this KYC requirement is to ensure  that fraudsters do not use the services of banks to perpetrate criminal activities like money laundering, Advance Fee Fraud (419) etc.

Because Nigeria does not have an established identity data base, like the social security number in the United States, it became increasingly difficult for banks to really know the true identity of their customers. More so, in Nigeria, any document can be easily procured or faked such that people can claim identities that are different from who they are.  As a result there has been instances where the same person opens bank accounts in different banks with different names.

Sometimes, the intention is not to commit fraud, while a lot of times, the various accounts are opened and used for illegal or unethical purposes.  For example, people with such accounts have used them to breach foreign exchange regulations, as well as borrow from the various banks with such loans never to be repaid. The inability to effectively ascertain the identity of bank customers has been exploited to perpetrate various criminalities and malpractice by organisations, bank customers, bankers, resulting in huge losses for the banks, their customers and the economy.

The Biometric Verification Number (BVN) was conceived to address this identification challenge. The idea is very simple. Capture the finger prints and picture of every bank customer and save the information with a number, which can then be issued to the customer, and can be used to verify his/her identity.

As the biometric (fingerprints and facial features) of each customer is captured and a number, called Biometric Verification Number (BVN),  is attached. These are  stored in a BVN database created by the banking industry in the custody of the Nigeria Interbank Settlement System (NIBSS).

So, if somebody walks into any bank, and says, “I am Mr. XYZ, living in ABC town”, all  the bank needs  to do to verify the information is  to request for BVN of that person, enter it into the BVN database in order to call up the identity  (biometrics and other information) registered with the BVN. The other option, especially if the person says he or she does not have a BVN, is for the bank to capture the biometrics of the person, use it to  conduct a search on the BVN database, to ascertain if indeed the person is telling the truth.

Thus, the first benefit and importance of the BVN is that it helps banks to ascertain the identity of any customer.  Consequently, the use of fictitious names and fake documents to open bank accounts for criminal purposes will be greatly reduced. But there are other benefits. To be continued next week (Send comments and enquiries to vanguardinvestorsforum@gmail.com

 

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