History of BVN, important of BVN, Benefits and Disadvantages of Bank Verification number. Read below..
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.
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Labels: Bank Services, BVN