How to verify borrower’s ID

In a country where there’s a huge consumer credit gap, high inflation and poverty rates, loans are definitely in high demand. As a lender, this means you get a high influx of loan applications daily. And guess what? You have to verify the identities of every single borrower that passes through your funnel. Character is a key tenet of credit but you can only begin to establish that when you know who you are dealing with first. Refusing to prioritize identity verification in your lending business is quite similar to standing in the middle of Lagos Island market and throwing your cash in the air hoping to see who grabbed the notes.

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Smaller lenders might be more accustomed to using some quick manual scans to verify borrowers’ ID such as:

Check for the issuer

Government-issued IDs are the most effective at confirming the identity of the borrower. Driver’s license, international passport, NIN slip/card, Maisha Namba and any other government-issued ID applicable in your region of operation is many times more likely to give you authentic and adequate information about a borrower than a school or work ID might give you.

Check for alterations

Fraudulent characters might want to game the system and make alterations to valid IDs by swapping the information it holds with their own information. Pay attention to consistency in the background. Check that the ID photo has not been replaced with a passport photo with similar colored background, and that important information like name, date of birth, etc. have not been blurred out and replaced.

Check expiry date

IDs are invalid beyond the expiry date. It’s possible that many people don’t know this or just they just try to play smart and hope it goes unnoticed. Everything else might look right with the ID but once the date is off, please knock it off and request for a valid ID. This does not apply to all means of ID; permanent voter’s cards and NIN slips/cards don’t have expiry dates.

Check the digital anchors: BVN and NIN

While manual checks look at the surface, digital verification dives into the data. In Nigeria, two primary anchors ensure you aren’t just lending to a “name,” but to a verified identity with a traceable history.

• Bank Verification Number (BVN): Think of this as a borrower’s “financial DNA”. Introduced by the CBN to unify identification across all banks, a BVN links every single account a person owns to one unique 11-digit number. For you, the lender, this means a borrower cannot hide a history of defaults by simply opening a new account elsewhere.
• National Identification Number (NIN): While the BVN tracks financial footprints, the NIN is the foundational proof of a person’s legal existence in Nigeria. It captures biometric data like fingerprints and facial features, making it the ultimate tool to prevent impersonation. Recent regulations now require NIN-BVN linkage, creating a watertight verification layer that is nearly impossible to falsify.

Verify with precision

Using technology to verify these IDs doesn’t just stop fraud; it speeds up your business. Here is how sophisticated lenders do it:

1. Direct Database Validation: Instead of just trusting a photo of a slip, use APIs to query the NIBSS or NIMC databases in real-time. This confirms the ID number is valid and active.
2. Attribute Cross-Referencing: Don’t just check if the ID exists; check if the data matches across different sources. For instance, Lendsqr allows you to cross-check a borrower’s phone number and date of birth on their NIN against their BVN records. If there is a mismatch, it’s an immediate red flag for identity theft.
3. Biometric & Liveness Matching: To ensure the person behind the screen is the real owner of the ID, you can use liveness checks. This technology matches a live “selfie” from the borrower against the official image stored in the government registry, ensuring no one is using a stolen photo to game your system.

Verify with tech

While small lenders are used to these quick checks which are prone to human error, lenders can take a step further to check the authenticity of borrowers’ ID using technology. Companies like Youverify VerifyMe Carbon IVS  Pngme provide tech solutions that automate your identity verification process and verify the KYC documents you require for your loan decisioning.

VerifyMe offers a robust ID verification pool which includes BVN, driver’s license, voter’s card, address verification, TIN, NIN and CAC number verifications. Most of their services are also available via APIs so apps are able to simply connect and get to work.

The good news is that lenders operating on Lendsqr can always leverage on the already existing integration with VerifyMe and need not worry about any extra integrations or setup. You can <sign up for free> now to set up your organization on Lendsqr in just 5 minutes.

Government entities such as National Identity Management Commission (NIMC) also offer online verification services for authorized entities to conduct the required checks against their database.

The fact that all these methods and organizations exist to ensure businesses, especially lending businesses know who is who, already screams the importance of identity verification.

Essentially, to protect your business from the bad guys, you must first shine a light on who they are.