The Central Bank of Nigeria (CBN) on June 30, extended the deadline for the Bank Verification Number (BVN) registration – about 16 months after the scheme was introduced. The deadline for the exercise is now October 31, 2015. The apex bank had explained that the absence of a unique identifier in the Nigerian banking industry was a major challenge inhibiting the effectiveness of the Know Your Customer (KYC) principle, with negative consequences on the growth of credit cards and other credit-related products.
The BVN was therefore introduced to complement the existing means of identification of customers, which include: the driver’s licence; the International Passport; the National Identity Card; and the Permanent Voter’s Card. The CBN, in collaboration with the Bankers’ Committee on February 14, 2014, launched the BVN as a centralized biometric identification system for the banking industry.
According to CBN, “The Bank Verification Number (BVN) project is an initiative aimed at protecting bank customers and further strengthening the Nigerian banking system. The Bank introduced BVN to all banks’ customers to address the absence of unique identifier across the Nigerian Banking Industry. The BVN is a number that enables a bank customer to have a single identity in the banking system. The full implementation was expected to enhance the effectiveness of KYC requirement, the safety and reliability of the payments system.”
Leveraging on the BVN to boost the KYC initiative was a milestone in the apex bank’s financial inclusion strategy. The CBN had developed a three-tiered KYC regime for banks and other financial institutions, under its regulatory purview, to promote financial inclusion. It was in line with the strategy meant to reduce the large number of the unbanked, especially in the non-urban area, that the KYC initiative was developed. It was also planned to leverage on the cashless policy introduced in 2012, to reduce the high volume of cash transactions in the economy.
It is a great relief to the banks and their customers that the BVN registration is extended. The huge crowd of customers that besieged the banks in the last days of the BVN registration was not unexpected. Nigerians are known for the habit of waiting for the last minute in matters of that nature; whereas the banks had used various means to draw attention to the importance of the BVN registration. For no good reasons, many customers failed to take advantage of the time while the exercise lasted.
Most customers have argued that the bank did not engage in adequate awareness campaign on the importance and urgency of the BVN registration. The banks were also said to have developed no defined guideline that would enable Nigerians in Diaspora to participate in the BVN registration. This created difficulty on the part of most bank customers who live abroad.
It should also be pointed out that some measure of confusion existed among the banks and between the banks and the CBN. It was obvious from the outcome of the exercise that many bank employees did not sufficiently understand the modus operandi of the BVN, hence they could not effectively communicate to their customers. This resulted in conflicting responses from banks to their customers. While the banks stated that customers who failed to executive the BVN registration would be barred from operating their accounts, the CBN explained something different.
Amidst the confusion, some banks had barred their customers who had not carried out the BVN exercise from accessing their accounts until they have registered. On the other hand, some banks issued directives that only customers that failed to enroll by June 30 should be barred from accessing their accounts. Other banks were said to have issued no threat to bar customers before or after the June 30 deadline. The signal became more conflicting when the apex bank offered its own clarification.
The CBN, through its Director of Corporate Communications, Alhaji Ibrahim Mu’azu, denied issuing any directive to banks to bar customers who could not enroll for the BVN by June 30. The bank explained that such customers would be allowed to access their money but would be denied some privileges such as online banking and the use of their Automated Teller Machine (ATM) cards. Media reports state that the confusion and uncertainty about what would happen after June 30, aggravated the mammoth crowd of customers that besieged the banks towards the end of June.
It is commendable that some banks have adopted a simplified mode of the BVN exercise to get rid of the long and time-consuming process that many customers had complained about. Fifteen million, out of 28 million customers, are said to have enrolled so far. The CBN and banks should devise a more creative way of carrying out the exercise. This will ensure that the remaining 13 million customers are captured within the four months extension. Banks should also acquire more biometric facilities for the exercise. Keeping customers waiting for long in the banking hall while the banks manage with limited facilities is not ideal. We also advise that the CBN and the banks engage in vigorous media campaign for the remaining period to stimulate the awareness among bank customers in whose benefit the BVN registration was introduced. The campaign should also be carried out at the grassroots. Special arrangement should be made to accommodate customers in Diaspora who may not have the opportunity of completing the exercise within the period. Thereafter, the BVN should be incorporated in the account opening process.