As of 29 December 2019, only a little over 40 million active bank accounts were linked to a Bank Verification Number (BVN), according to data from Nigeria Interbank Settlement System (NIBSS). Whereas, over 124 million bank accounts were created by November of the same year and the total number of active bank accounts was at over 79 million.
In other words, about 80 million bank accounts exist without BVN, while more than 30 million active ones are also not linked.
On the last Monday of 2019, the Central Bank of Nigeria said its resolution is to increase the number of BVN linked accounts to 100 million in 2025.
Earlier in December, the Bankers’ Committee had unveiled a new plan that requires classification of BVN into two; BVN Premium and BVN Lite. The BVN Premium covers customers that can provide the 18 basic requirements for a complete BVN enrolment, while the BVN Lite requires minimal documentation like name and phone number for bank customers, especially those in rural areas that do not meet the full requirements.
BVN, an initiative of the Central Bank of Nigeria (CBN) remains the best centralised verification system in Nigeria’s data harmonisation history. The unique identification number which uses biometric technology to register customers acts as a universal identity enabling easy identification across the financial services industry.
But since 2014 when the CBN started the exercise to link every account in all the banks to a BVN, less than half has been linked successfully.
Millions of bank accounts not linked to a BVN means interoperability in the banking sector would remain a dream. This is why customers are still required to fill out forms and provide documents such as utility bills, passports, etc when they want to open another account with a bank.
As a result of the BVN, the CBN is able to create a database of bank customers maintained by the Nigerian Inter-bank Settlement System (NIBSS). The database ensures that banks and individuals are protected from fraud as suspicious transactions are easily identified and reported. But the inability to link all bank accounts means that these fraud incidences go unchecked.
Although data harmonisation is a continuous process because banks and other financial institutions have to open new accounts on a daily basis, the CBN projecting till 2025 to link 100 million accounts when as much as 124 million accounts exist raises some concerns.
First, the population of the country is currently estimated at 200 million people. Nigeria’s population is projected to reach 233 million by 2025 according to populationpyramid.net, which means with technological advancement, more than 150 million people would likely have a bank account.
It should also be said that having 124 million bank accounts in existence with 79 million very active, does not mean that the remaining 76 million without bank accounts are unable to using banking services because they are ineligible. The World Bank report found that over 40 million Nigerians who do not go close to ATMs carry on online transactions, e-Commerce among other engagements that will make them financially included in the Nigerian financial ecosystem.
Interestingly, the CBN said in August that it has set a target of 95 percent financial inclusion rate for Nigeria 2024. With that pledge, the CBN should be looking to link more than 100 million accounts by 2025. To make that happen, a lot of attention has to be given to data harmonisation in 2020. The apex can start with ensuring that all 79 million active accounts are active before the end of the year.
It is encouraging that officials in the CBN are already thinking in this direction. At a function in 2019, Musa Jimoh, deputy director, Payment System Management, CBN noted that not only was the banking regulator committed to meeting the target, it was working with all the stakeholders including telecoms, fintechs, commercial banks among others to get about 150 million Nigerians to embrace the financial system and its numerous offerings.
Biometric enrolment benefits the unbanked segment who cannot read or write as they only require their fingerprints and pictures as signatures. BVN will also increase access to loans as it helps credit providers to 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.