Don't Miss

Bank customers’ biometric registration will boost retail credit – NIBSS

By BusinessNews Staff on April 23, 2015

The ongoing biometric registration of bank customers across the country will boost retail credit in the banking industry, the Managing Director, Nigeria Interbank Settlement System, Mr. Ade Shonubi, has said.

Also known as Bank Verification Number project, the exercise involves the registration of customers in the financial system using biometric technology. It makes bank accounts more secure by using unique identifiers such as fingerprints.

The NIBSS boss, who is responsible for the implementation of the BVN project, said it would assist banks to identify and blacklist fraudulent customers, thereby creating more credit access to genuine customers.

Shonubi said, “When the BVN project came up, there were three key things. First and most important of all is for us to identify our customers and identify them uniquely across banks and across accounts. So, once you have the BVN, even if you have 10 bank accounts, it is the same BVN that will be tied to the bank accounts.

“Now, relating to identification is the possibility of banks blacklisting people who have committed financial infractions. It could be people who have gone to forge documents. What happens today is that one customer will go to a bank to commit an offence and run to another bank to commit same offence because there is no way of linking all these activities together. So, we have found out that there are quite a lot of losses relating to these individuals from one bank to another.”

The NIBSS boss, in a statement, stressed that once banks were able to identify and blacklist fraudulent customers, it would be easy for lenders to extend loans to creditworthy clients.

The BVN programme is aimed at protecting bank customers and further strengthening the Nigerian banking system.

An initiative of the Central Bank of Nigeria and the Bankers’ Committee, the BVN is meant to address the safety of customers’ funds, avoids losses through compromise of personal identification numbers and other criminal activities in the industry.

Shonubi said apart from the challenge of identifying customers, a major hindrance to retail credit in the Nigerian environment was the perception that most Nigerians were crooks who would look for ways to avoid loan repayment.

He said the BVN would address the loan default problems by helping to distinguish fraudulent customers from the law-abiding banking public.

As a result, the NIBSS MD stated that the biometric registration of bank customers’ project would make lenders to begin to offer retail credit.

He explained that “loan default has become a concern for bank; if I lend you money now and you go away, how do I identify you?

“So, you find that the entire retail consumer lending is to people with formal employment, that is why you see everybody running to oil companies to say ‘let’s give your workers car loan; let’s give your workers consumer loan; let’s give your workers TV loan.’

“But there are a lot of self-employed people working in smaller organisations, who should also benefit. Nobody wants to take the risk on them because if they resign today and run off, how are you going to get your money? Once they have bank accounts, the BVN allows us to identify them.”

As part of the efforts to encourage BVN enrolment, the CBN has directed banks to only honour transactions over N100m from customers with the BVN from March 2015.

Such transactions, according to the regulator, include money transfers, loans and contingencies.

The central bank also urged all bank customers to register for their BVN by June 2015, warning that any bank customer without a BVN would be deemed to have inadequate know-your-customers by that date.

Analysts have described the BVN as a ‘silver-bullet solution’ to many of the challenges facing the banking industry.

According to the NIBSS, the BVN is a unique identifier for each bank customer across the financial industry, making it possible to build and track customer financial history and activity.

It said would allow banks’ access to more reliable information about decisions on customer loan and credit applications and other complex transactions.

The initiative, launched on February 14 last year, it said, would also encourage financial inclusion as those who had typically stayed away from mainstream banking due to low literacy levels would be able to access their bank accounts using their biometric information rather than traditional identification methods.

The NIBSS, which is owned by the CBN and all licensed banks in the country, provides the infrastructure for automated processing of data, such as customers’ biometric information, settlement of payments and fund transfer instructions between banks, discount houses and card companies in Nigeria.

[Punch]

headline