BVN is great, but here are 5 ways CBN can make it better

BVN is probably one of the greatest financial technology inventions in Africa, and it came out of the ingenuity of bankers who got tired of complaining and talking about the federal obligation of every government to find a way to identify their citizens. 

For years, the lack of a centralized identity system remained a major hurdle for Nigerian governance. Despite repeated attempts, previous administrations struggled to establish a reliable way to identify citizens. 

Meanwhile, banking needed to grow because the fraud in banking had grown to an insane level.

Sanusi Lamido, the then-Governor of the Central Bank of Nigeria (CBN), known for his direct approach and problem-solving skills rallied the banking community and, with a $60 million investment, spearheaded the creation of the BVN.

Partnering with Dermalog for the technical implementation, the CBN ultimately handed over the BVN’s management to the Nigeria Inter-Bank Settlement System (NIBSS).

While BVN has undoubtedly done a fantastic job, there’s always room for improvement. This article explores five key areas where the CBN can further enhance the BVN system.

Nigerians should be able to update their details themselves

Currently, updating BVN information requires a visit to a bank branch which can be very inconvenient and time consuming. This is a waste of time for everyone and not updating the BVN information poses risks not only to the customer, but also to the banks and the general Nigerian financial industry and ecosystem.

NIBSS must fix this by creating a very secure portal that allows users to update their phone numbers, emails, and addresses.

To protect against fraud and ensure legitimate updates, they can also enforce multi factor authentication and verified identity checks. This way, data remains fresh and BVN continues to be a reliable source of information.

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BVN details should be subject to periodic revalidation

What happens if a customer refuses to update their information or dies but their banks are not told? This happens a whole lot of time. 

Fraudsters are using the BVN of dead people or those who have traveled abroad to do unthinkable frauds. Not being able to validate that this information is still valid is a significant risk to banks and the industry.

BVN information can become outdated, especially with frequent phone number changes and residential moves.  Introducing a mandatory BVN verification process every five years would address this.

This process could be conducted online using the secure portal we advised above, so users confirming their details to reaffirm their identity. This periodic refresh would not only ensure data accuracy but also serve as a form of digital “proof of life,” helping prevent fraudulent activity linked to deceased individuals’ accounts.

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Let customers view all accounts tied to their BVN

Many Nigerians are unaware of all the bank accounts linked to their BVN which means they can be exposed to fraud if someone ties their BVN to accounts they have no control over. But this information is available to NIBSS.

To stop this issue, the CBN should mandate NIBSS to allow customers to be able to view all bank accounts tied to their BVN. And there should be a smart process to allow customers to repudiate accounts they have no relationship with

This should happen online and securely. Users are then empowered  to take control of their financial footprint and identify any unauthorized accounts.

Allow customers view all their bank transactions and share with their bank or other partners they want to have access to it.

In the same vein, customers should be able to view all their transactions across their linked bank accounts. This would give users a clearer picture of their finances, and help make better budgeting decisions.

With user consent, customers could grant temporary or permanent access to specific transaction data for authorized partners like potential lenders, investment firms, or even tax advisors.

This data sharing ability would speed up financial processes and help users present a complete financial picture when seeking loans, investments, or other financial services.

People should be able to create a global mandate against BVN

Nigerians need loans and lenders need better ways to get their loans back. Having a global mandate against a BVN and all associated accounts would be an awesome idea.

NIBSS should develop a secure, BVN-enabled interbank payment system. This system, with user consent, could function similarly to a direct debit system, allowing authorized entities like lenders to initiate debits directly across a user’s various bank accounts to settle outstanding obligations.

When a user opens a new bank account, it would enable automatically for debits. This would remove the need for individual direct debit mandates  individual accounts, saving time and effort. And giving a very solid assurance to lenders and payments providers.

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BVN is stuck in second gear if it doesn’t evolve

Creating BVN was a commendable first step, but if it doesn’t evolve with technology, it risks becoming  more bureaucratic than valuable. As such, CBN needs to consider these 5 ways to make the BVN work for Nigerians, not the other way around.