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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 centralised biometric identification system, and tagged Bank Verification Number (BVN) (Ehi Eric E. 2015).

Also 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 Eric E. 2015).

Vanguard Newspaper (2015), the BVN became imperative following the increasing incidence of compromise on conventional security systems such as password and Personal Identification Number (PIN) of customers.  

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).

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 Shonubi, 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.

          But has the CBN consider the effect the policy (BVN) will have in Nigeria economy. This study therefore seeks to determine the effect of BVN on Nigeria economy.  

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 Luo  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 Eric E. 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 good policy (BVN) what effect will it have in Nigeria economy now and in future? Has the CBN considers the resources (technological and human resources) needed to implemented it? What impact will it have on saving culture in commercial bank? Will it be able to solve the problems it was made to solve?     

1.3     Objectives of the Study

The broad objective of this study is to examine the Effect of Bank Verification Number in Nigeria economy. Specifies objectives are:

1.     To examine the significantly relationship between B.V.N and
GDP in Nigeria.

2.     To determine the significantly effect of B.V.N on currency circulation in Nigeria.

3.     To determine the extent BVN policy has effect saving account in Nigeria.

4.     To determine the extent BVN affect electronic payment system.

1.4     Research Questions

The following research questions guided the study.

i.                   What are the significantly relationship between B.V.N and
GDP of Nigeria?

ii.                 What is the significantly effect of B.V.N on currency circulation in Nigeria?

iii.              At what extent does B.VN policy has affect on saving account in Nigeria?

iv.              At what level will BVN affect electronic payment system?

1.5     Hypotheses of the Study

1.       H0:     There is no significantly relationship between B.V.N and GDP of


H1:     There is significantly relationship between B.V.N and GDP of Nigeria.

2.       H0:     BVN has a positive impact on currency circulation in Nigeria. 

H1:     BVN has a negative impact on currency circulation in Nigeria.


3.       H0:     BVN policy has positive effect on saving account in Nigeria.

          H1:     BVN policy has negative effect on saving account in Nigeria.

4.       H0:     BVN do not  affect electronic payment system.

          H1:     BVN affect electronic payment system.

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 Bank Verification Number in Nigeria economy.

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. 

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.

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

2.       Money Laundering: is the procedure by which the proceeds f illegal acts are converted into apparently legal activities thus concealing their criminal origin.

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

4.       Commercial Bank: An institution charged with the primary function of accepting deposits, granting business loans and advances, and offering other relatedservices like issuance of letter of credit, bank drafts and FOREX trading among others.

5.       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.

6.       Microfinance: 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.


Vanguard Newspaper (March 12, 2015)  Importance of Bank Verification Number March 12, 2015.  Accessed on 20th March 2016.

Sarah Luo ( 2014) Central Bank of Nigeria (CBN) Implements Bank Verification Number (BVN) Identification System for Customers in Lagos. . Tuesday, July 29, 2014. Accessed on 10th May 2016

Central Bank of Nigeria, ‘Bank Verification Number’ Accessed 10th May 2016

Ehi Eric E. (2015) A Critical Analysis of The Bank Verification Number Project Introduced By The Central Bank Of Nigeria. DSC Publications Ltd. Online Accessed 10th May 2016

Linkedin (2016) The Effect Of Bvn On Social Security And Credit Risk Accessed 10th May 2016

Tribune Newspaper (October 29, 2015)  31 million bank accounts may be barred as BVN deadline ends on Friday by Nwokoji  C.  Accessed 10th May 2016 

Daily Trust Newspaper (March 8 2016)  As deadline for bank verification number draws near by Agabi C. Accessed 10th May 2016 

Premium Times Newspaper (November 15, 2014) 13 things bank customers must know about Bank Verification Number business/ Accessed 10th May 2016

Punch Newspaper (March 20, 2016) Keeping your Bank Verification Number safe Accessed 10th May 2016

Daily Trust Newspaper (November 2015)  BVN registration continues- CBN, NIBSS by Hamisu Muhammad & Sunday Michael Ogwu

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