Bank verification number: implication on the nigerian economy and banking sector

Thesis Overview

<p> </p><p><b>INTRODUCTION</b></p><p><b>1.1 &nbsp; BACKGROUND TO THE<br>STUDY</b></p><p>The<br>role of BVN aimed at curtailing hazards associated with social security and<br>credit risk cannot be underestimated (Leland &amp; David, 1977). In recent<br>times, biometric technologies have been used to analyze human characteristics<br>as an enhanced form of authentication for real-time security processes. In the<br>face of increasing incidents of compromise on our conventional security systems<br>(password and PIN), the need for greater security on access to sensitive or<br>personal information in the Banking system becomes inevitable (Blass &amp;<br>Oved, 2003).</p><p>In<br>the same vein, the extent to which violation in the credit policies and credit<br>monitoring system weakens the financial intermediary system continue to attract<br>empirical and theoretical debate on how well Bank Verification system would<br>thwart those issues of default and scam.</p><p>In<br>addressing existing challenges with identity management, the Central Bank of<br>Nigeria, through the banker’s committee in collaboration with all Nigerian<br>banks in February 14, 2014 launched a centralized biometric identification<br>system tagged “Bank Verification Number (BVN)”.</p><p>The<br>BVN gives each Bank customer a unique identity across the Nigerian Banking<br>industry that can be used for easy identification and verification at Point of<br>Banking operations (Evangelista et al, 2001). Biometrics refers to<br>identification of an individual based on physiological or behavioural<br>attributes- fingerprint, voice, signature, facial features etc.</p><p>BVN<br>uses biometric technology to register customers in the financial system. It<br>records these physical features which are unique to individuals – fingerprints<br>and the face. The record would be used to identify the person afterwards<br>(Diamond, 1991). Once a person’s biometrics have been recorded, and BVN issued<br>the account would be accessed through BVN. The major objectives of the<br>initiative are to protect bank customers, reduce fraud and strengthen the<br>Nigerian banking system.</p><p>Biometric<br>enrolment is helpful to people who cannot read and write. Their finger prints<br>and pictures would serve the same purpose as signatures (Claudio, 2002).<br>Multiple account holders would be covered with a single registration in any of<br>the banks where they have accounts. BVN will help the banking system reduce<br>situations where loan defaulters, for instance, move from one bank to the other<br>and the banks extend new credits to them, without knowing their history. Banks<br>would be able to track transactions across all banks in Nigeria with more ease.<br>As CBN implements the BVN initiative, it has to ensure the security of the<br>data, from rogue bankers and also importantly from damage, as has been the<br>experience with other sectors that engaged in biometric enrolments. It should<br>also create measures to punish banks that might exploit the information they<br>have to blackmail customers with whom they have disagreements.</p><p>Customers<br>Bank Accounts are protected from unauthorized access with the use of BVN.<br>Through an enhanced biometric real-time security system, the danger of<br>unauthorized access to customer’s bank account is brought under check. The BVN<br>is encompassing in detecting fraud of whatever type, whether through<br>unauthorized access or through illegally authorized forms, and any other forms<br>of fraud that’s against the rule of law and social justice (De Meza &amp; David,<br>2000).</p><p>It<br>will be of great benefit to Nigerian economy as she undertakes a means to<br>effective transaction delivery through the BVN irrespective of diversities in<br>opinions, critics and shortcomings that may ensue in actualization of this<br>project. With BVN, Customers who borrow from one bank and default would not go<br>to another bank to borrow without being tracked due to a unified credit<br>performance system as Credit Bureau and lenders would be able to effect ‘’Know<br>Your Customer (KYC)’’ policy by the CBN and fraudulent activities would be<br>curtailed and banking activities would be monitored appropriately.</p><p><b>1.2 &nbsp; STATEMENT OF THE<br>PROBLEM</b></p><p>BVN<br>is a great initiative that would reduce illegal banking transactions and<br>improve national financial intelligence gathering which will boost the economy.<br>The interests of account holders should be accorded importance so that their<br>increased confidence in the banking system would improve the financial standing<br>of banks. Customers will use banks more when they know that their transactions<br>are safe. BVN offers vast opportunities to protect customers, banks and the<br>entire financial system. However, the researcher is examining the implication<br>of Bank verification number BVN on the Nigerian economy and banking sector.</p><p><b>1.3 &nbsp; OBJECTIVES OF THE<br>STUDY</b></p><p>The<br>following are the objectives of this study:</p><p>To<br>examine the implication of Bank Verification Number BVN on the Nigerian<br>economy.</p><p>To<br>examine the implication of Bank Verification Number BVN on the Nigerian banking<br>sector.</p><p>To<br>determine the threats and weaknesses of the implementation of Bank Verification<br>Number BVN.</p><p><b>1.4 &nbsp; RESEARCH QUESTIONS</b></p><p>What<br>is the implication of Bank Verification Number BVN on the Nigerian economy?</p><p>What<br>is the implication of Bank Verification Number BVN on the Nigerian banking<br>sector?</p><p>What<br>are the threats and weaknesses of the implementation of Bank Verification<br>Number BVN?</p><p><b>1.5 &nbsp; HYPOTHESIS</b></p><p>HO:<br>There is no significant relationship between Bank Verification Number and the<br>Nigerian economy</p><p>HA:<br>There is significant relationship between Bank Verification Number and the<br>Nigerian economy</p><p><b>1.6 &nbsp; SIGNIFICANCE OF THE<br>STUDY</b></p><p>The<br>following are the significance of this study:</p><p>The<br>outcome of this study will educate the general public on the benefits and<br>implications of Bank Verification Number and it effect on the Nigerian economy<br>and the banking sector.</p><p>This<br>research will be a contribution to the body of literature in the area of the<br>effect of personality trait on student’s academic performance, thereby<br>constituting the empirical literature for future research in the subject area.</p><p><b>1.7 &nbsp; SCOPE/LIMITATIONS<br>OF THE STUDY</b></p><p>This<br>study will cover the issues of Bank Verification Number and its implication on<br>the Nigerian economy and the banking sector</p><p><b>LIMITATION OF STUDY</b></p><p>Financial<br>constraint- Insufficient fund tends to impede the efficiency of the researcher<br>in sourcing for the relevant materials, literature or information and in the<br>process of data collection (internet, questionnaire and interview).</p><p>&nbsp;Time<br>constraint- The researcher will simultaneously engage in this study with other<br>academic work. This consequently will cut down on the time devoted for the<br>research work</p> <br><p></p>