NIGERIA: NIBSS Issues Approved Standard Operating Guidelines For BVN Matching System
The Nigeria Interbank Settlement System (NIBSS) has issued approved standard operating guidelines for Bank Verification Number (BVN) matching system, mainly for a harmonized way of verifying customer’s identity.
This, the company owned by all deposit money banks said, is to undergird the centralized BVN for a uniform repeatable approach in using the system in the banking industry.
This uniform approach needs to define the routine processes and procedures followed by every organization in the industry that would facilitate consistent conformance to technical and quality system requirements and support data quality.
In a statement to this effect, it said, the NIBSS standard operating procedure for the BVN system would be specific to the banking industry and assist the industry to maintain their quality control and quality assurance processes and ensure compliance with governmental and nongovernmental regulations.
This document is developed by the Bankers’ Committee Operations committee for the project. The Operations Committee is commissioned to champion the development of BVN standards for the banking community.
“The purpose of these standard operating guidelines (SOG) is to prescribe the processes for collecting, updating, linking, storing and using identification data from bank customers.
“This SOG takes into consideration the regulatory requirements as well as established standards and industry best practices. In particular, this SOG describes the operationalization of the approved regulatory framework for BVN operations and watch-list for the Nigerian banking industry,” the statement read in part.
The DMBs presently adopt various methods for Know Your Customer (KYC) requirements. The methods used in identifying customers differ from bank to bank because there is no harmonized way of verifying customer’s identity.
In view of this, the financial services sector through the Bankers’ Committee proactively embarked upon the deployment of a centralized bank verification system for the banking industry.
This is to aid the delivery of its services by building a technology system for verification and secure authentication of the identity of bank customers.
Recall that the Central Bank of Nigeria (CBN), in furtherance of its mandate for the development of the electronic payments system in Nigeria released the exposure draft on the regulatory framework for Bank Verification Number (BVN) operations and watch-list for the Nigerian financial system for your review and comments.
This harmonized system, according to NIBSS, will have the ability to identify a person by a physical characteristic such as fingerprints, facial, voice or retinal scans.
This has had several applications in security and has been used by several organizations. It has become popular because of its many advantages over traditional security systems such as passwords and Personal Identification Numbers (PIN).
The selected identification option for the Nigeria Bank Customer Identification Scheme is fingerprints and facial recognition.
The CBN in conjunction with the bankers’ committee embarked on a shared services program with three key objectives. These are to: improve KYC process within the banking sector; increase access, convenience, service levels across the industry and enable greater financial inclusion and integration of financial services into the economy, with its attendant positive impact on economic development.
The Bankers’ Committee with CBN recognized that payments are a key driver of costs, hence the committee’s focus on payment system transformation.
A major requirement that affects the Nigerian payment system is the need to “Know Your Customer”. Additionally, the need to know your customer is reinforced by the latest anti-money laundering/ counter-terrorism directive and requirements.
NIBSS explained that uniquely identifying bank customers would help immensely to reduce the current administrative costs of the KYC requirement.
This is in addition to the revision of the KYC requirement. More importantly, as the regulators (CBN and others) are focused on transforming the payment system (policy and its processes), a unique identity for customers would impact other areas such as credit check, authenticity and non-repudiation of transactions and fraud management creating more efficiency and effectiveness within the payment system.
“In view of this, the financial services sector through the Bankers’ Committee and the CBN proactively embarked upon the deployment of a centralized bank verification system for the banking industry.
“The BVN matching system will aid in uniquely identifying customers across all banks. This solution will also help in reducing the repudiation of transactions. Verification of identity is possible without resort to documents that may be stolen, lost or altered,” the statement clarified.
On the benefits of this new system, it noted that a person’s fingerprint cannot be shared easily or stolen and no two persons can have an exact match.
Biometrics is easy to use and does not have associated stress of forgotten password/password resets and can never be forgotten as they are physical characteristics of the person; a biometric feature unequivocally attaches a person to an event. If there is a fraudulent/suspicious transaction, regulatory authorities and banks would have an accurate record of the customer involved among others.
SOURCE: Tribune Newspaper / Chima Nwokoji
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