The Effect Of BVN In Delivering Bank In Nigeria

Project and Seminar Material for Accountancy / Accounting

The Effect Of BVN In Delivering Bank In Nigeria


This study examines the effect of BVN in delivering banks in Nigeria by the Central Bank of Nigeria. The BVN policy, introduced by central bank to cure the fraudulent practice by account holder, and accentuated by e-banking schemes, is examined in this study in the context of a country malaised with pressing developmental challenges including illiteracy, low standards of living, poverty and insecurity and a still developing financial and banking system. The study takes a descriptive look at the benefits to be derived from such an initiative, as well as the various challenges that have to be surmounted in order to fully harness these positive outcomes, which would aid towards the attainment of the country’s developmental goals. Additionally, particular focus is given to the issue of security, and thus a section has been dedicated to explicating on the importance of electronic identity and the recently introduced Bank Verification Number system.

Chapter One


1.1 Background of the Study

In banking, security is paramount to protect depositors’ funds. It is in the light of this that the Central Bank of Nigeria (CBN), through the Bankers’ Committee, Deposit Money Banks and Nigeria Interbank-Settlement System (NIBSS), introduced the centralized biometric identification system, and tagged Bank Verification Number (BVN) (Ehi 2015). Therefore, going by the spate of frauds and cashless policy, the CBN in conjunction with all Nigerian banks launched the BVN project to enhance the operation of banks. The BVN became imperative following the increasing incidence of compromise on conventional security systems such as password and Personal Identification Number (PIN) of customers (Vanguard Newspaper 2015). The Bank Verification Number, BVN, is a unique identification number for all Bank Customers within the Nigerian banking industry. BVN is a biometric authentication of Each Bank customer, especially those who make electronic and cashless transfers through a unique set of digits (Daily Trust Newspaper, March 8 2016).

The initiative is part of the overall policy of the Financial sector Strategy, FSS, to ensure that Nigeria becomes one of the twenty largest economies in the world by the year 2020 (Ehi 2015).

According to the apex bank, customers are expected to walk into a selected bank fill and submit the BVN enrolment form. Following this, such customer will present him or herself for facial and fingerprint capturing. Thereafter, an acknowledgment slip with the transaction identification will be issued to the customer whose enrolment will be confirmed and a unique BVN, generated. The customer will immediately be notified via sms with the bank verification number. This is in compliance with the directive from the Central Bank of Nigeria (CBN) that by the 30th of June 2015, all bank customers should have the BVN while as from march same year, transactions valued at hundred million naira and above should only be allowed for customers with bank verification number. (Tribune Newspaper October 29, 2015)

The Central Bank of Nigeria considered the exercise as a key component of knows customer policy of banks. It is also a plan to eliminate fear in banks and make the country to be in league with developed countries of the world. As the Bank Verification Number enrolment closes tomorrow, it is therefore imperative for all Nigerians to ensure that they are enrolled. It is believed that if the BVN enrollment is properly managed, it will not only enhance credit advancement to bank customers, but also reduce reported cases of scam, fraud and account impersonation while at the same time assist commercial banks in keeping authentic records of their clients. (Ade, 2016)

Apart from these, the BVN will simplify banking operations especially inter-bank transfer, improve services and reduce unnecessary queues within banking halls.

At this junction, observers believe that there is need for the apex bank to consider extending the enrolment period in view of the large number of Nigerians who are yet to be registered.

Above all the Central Bank of Nigeria should use the various platforms to publicize the intricacies of the policy. This study therefore analyzes the effect of BVN delivery of banking service in Enugu metropolis.

1.2 Statement of Problems

The role of BVN aimed at controlling hazards associated with social security and credit risk cannot be underestimated. 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 (Sarah, 2014). 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. Biometrics refers to identification of an individual based on physiological or behavioural attributes- fingerprint, voice, signature, facial features etc (Ehi, 2015).

Bank Verification Number (BVN) is an initiative of the Central Bank of Nigeria to give customers a unique number that can be verified across the Nigerian banking industry. BVN helps to protect every bank customer’s information by assigning to their account a unique identification number. The Bank verification number uses bio-metrics. Which means, the BVN is unique to every individual with respect to their physiological or behavioral attribute with the use of fingerprint or thumbprint or electronic signature etc? This helps to strengthen any banking security system so as to protect individual account from fraudsters or against any fraudulent act from infringed third party.

BVNs are created through the use of biometric data capture machines, which rely on data such as fingerprints and facial recognition technology to establish for each customer “a unique identity across the Nigerian Banking industry for easy identification and verification.” The implementation of BVNs is a part of CBN’s Financial Sector Strategy (FSS) goal of helping the country become “one of the top 20 largest economies in the world by 2020.”

The role through which the BVN enhances the operations of the banking system in Nigeria is challenges that time will show it. This study therefore seeks to investigate the effect of CBN policy on Bank Verification Number in improving the banking services in Nigeria using Enugu metropolise as a case study.

1.3 Objectives of the Study

The broad objective of this study is to examine the effect of CBN policy on Bank Verification Number in improving the banking services in Nigeria using Enugu metropolise as a case study. Specifies objectives are:

  1. To determine the significant effect of B.V.N on number of cheque clear in the country.
  2. To determine the extent B.VN policy has effected saving account in Nigeria.

1.4 Research Questions

The following research questions guided the study. The research objectives were distilled into six research questions as stated below.

  1. What is the significant effect of B.V.N on number of cheque clear in the country?
  2. What is the effect of BVN on saving account in Nigeria?

1.5 Hypotheses of the Study

  1. H0: BVN do not have significance effect on number of cheque clear.
    H1: BVN have significance effect on number of cheque clear.
  2. H0: BVN policy has positive effect on saving account in Nigeria.
    H2: BVN policy does not have a positive effect on saving account in Nigeria.

1.6 Significance of the Study

The results from this study will be useful to various sector of the economy, particularly the financial sector and government policy makers. It will broader the literatures on economic implications of money laundering and future effect of BVN on economy growth.

Also it will help to identify advantages and disadvantages of BVN to the banks and customers. It will show the impact of BVN policy on money launder and customer satisfaction.

1.7 Scope and Limitation of the Study

The research topic is on the effect of BVN delivery of banking services in Enugu metropolise.

The limitation of the study among other things includes lack of data on BVN base on ground that it is new policy in Nigeria. The behaviour of bank officers is another problem the researcher face in sourcing data.

a) Availability Of Research Material:

The research material available to the researcher is insufficient, thereby limiting the study

b) Time:

The time frame allocated to the study does not enhance wider coverage as the researcher has to combine other academic activities and examinations with the study.

c) Organizational Privacy:

Limited Access to the selected auditing firm makes it difficult to get all the necessary and required information concerning the activities

1.8 Definition of Terms

It is important to give a brief definition of the following key terms, in order to know the meaning of the key concept and some words in this research.


Bank Verification Number is a new policy created by Central Bank of Nigeria to control and protect bank account holders from unauthorized access.

Money Laundering:

Is the procedure by which the proceeds f illegal acts are converted into apparently legal activities thus concealing their criminal origin.


Central Bank of Nigeria, (CBN) is the apex bank in Nigeria, their duty is to regulate financial institution in the country.

Commercial Bank:

An institution charged with the primary function of accepting deposits, granting business loan and advances, and offering other related services like issuance of letter of credit, bank drafts and FOREX trading among others.

Deposits /Savings:

A deposit held with a bank in which the deposit is held for a fixed term or which requires notice for withdrawal, and where interest is paid.


Microfinance is generally defined as specialized financial tools, such as small loans, savings accounts and insurance policies, available to poor households and small businesses that do not typically have access to financial services.

1.9 Organization of the Study

This research work is organized in five chapters, for easy understanding, as follows

  • Chapter one is concern with the introduction, which consist of the (overview, of the study), statement of problem, objectives of the study, research hypotheses, significance of the study, scope and limitation of the study, definition of terms and historical background of the study.
  • Chapter two highlights the theoretical framework on which the study is based, thus the review of related literature.
  • Chapter three deals on the research design and methodology adopted in the study.
  • Chapter four concentrate on the data collection and analysis and presentation of finding.
  • Chapter five gives summary, conclusion, and recommendations made of the study.

Chapter Five

Summary, Conclusion and Recommendation

5.1 Introduction

It is important to ascertain that the objective of this study was impact of BVN on financial security in Nigeria Bank. In the preceding chapter, the relevant data collected for this study were presented, critically analyzed and appropriate interpretation given. In this chapter, certain recommendations made which in the opinion of the researcher will be of benefits in addressing the challenges of impact of BVN on financial security in Nigeria Bank.

5.2 Summary

This study was on impact of BVN on financial security in Nigeria Bank. Four objectives were raised which included: To monitor effect of the bank verification number on the level of financial crimes in Nigeria, to give everyone access to a single account, to help limit multiple account by a single owner, to investigate the role of the central bank of Nigeria in the implementation of the bank verification number system, to investigate the impact of bank verification number system on the level of financial safety in the Nigerian banks. In line with these objectives, two research hypotheses were formulated and two null hypotheses were posited. The total population for the study is 200 staff of CBN, Abuja. The researcher used questionnaires as the instrument for the data collection. Descriptive Survey research design was adopted for this study. A total of 133 respondents made accountants,human resource managers, senior staff and junior staff were used for the study. The data collected were presented in tables and analyzed using simple percentages and frequencies

5.3 Conclusion

Bank Verification Number (BVN) is a biometric identification of customers in the financial industry launched by the CBN in February 2014, which is aimed at revolutionizing the payment system in the country. An Online Bank Verification Number System for Nigerian banks was produced in this application. Through the new system, customers will be assigned a single identity within the financial system. It will help people who cannot read and write to use their biometrics which cannot be replicated, to tackle incidence of identity theft and enable banks to really identify their customers in the overall context of Know Your Customer (KYC) initiative. The existing method of queuing at the bank to collect and submit BVN enrolment form has been so stressful, time consuming and always at a high cost. The new system would be very easy to use because of its accuracy and reliability. Information about BVN and the enrolment requirement can be promptly assessed easily.

5.4 Recommendation

The following are recommendations. It would be interesting if there could be a very secure system whereby, anyone can log on from their phone, tablet or computer and access the registration site and enroll themselves. There is need to do a further research on the customer account linking process in the case where one person as more than three names and at least two will be required to link the account. It would be good if the database was larger such as it has a full scale of the background of each customer from place of birth to time of death and it automatically deletes the BVN atthe time of death

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