Bank Verification As Catalyst For Access To Credit For SMEs

The on-going Bank Verification Number (BVN), an exercise put in motion by the Central Bank of Nigeria (CBN), has been seen  by many as one policy that may likely turn around the fortunes of the small businesses sector, a sector seen as the main engine that drives the industrialisation zeal of any nation. Amaka Ifeakandu was among a select group of reporters briefed by  the Group Managing Director/Chief Executive Officer of Fidelity Bank Plc, Mr. Nnamdi Okonkwo, on this issue.

Managing Director of Fidelity Bank, Nnamdi Okonkwo did not minced words when he said that the ongoing bank verification number (BVN) enrolment  would enhance access to credit to small and medium scale enterprises (SMEs) and better their lots on the long run.

Okonkwo also said that  BVN registration would boost the credit score of bank customers in Nigeria, adding that a credit score is primarily based on credit report information typically sourced from credit bureaus and that banks  use credit scores to determine who qualifies for a loan, among others.
He said that there are about 17 million registered SMEs in Nigeria today, pointing out that  in most countries, SMEs account for up to 70 per cent or more of businesses, yet in developing economies like Nigeria, SMEs suffer from lack of access to finance, among other issues.

Explaining further  the Fidelity Bank boss said: “In more developed parts of the world, they have credit rating systems and social identification system. For example, if I am Nnamdi Okonkwo, there might be other 1,000 Nnamdi Okonkwos, but each Nnamdi Okonkwo has a unique number assigned by his country such that whenever you put that number in, everything about that person comes out. We are gradually getting to that.

“Until we get there, credit scoring system is still a challenge. Therefore, it is possible that this same Nnamdi Okonkwo can go to a bank, take a loan and default, move to another bank, still take a loan and default and nobody sees that his credit history is bad. But with what the CBN has done with the BVN, that will be taken care of. That is why I am advising everybody to go and register and get your BVN.

“When each of us have our BVN, which is tied to our thump, if I need to lend money to you, I can check. If the person is a notorious debtor in other banks, then he doesn’t get a loan from me and that protects all of us because the bank does not own all the money. Most of the monies that banks use to do business belong to depositors. So, whatever initiative the CBN is taking, is to protect depositors and the larger economy.

“The BVN is a unique number that every account holder in Nigeria should have, going forward. So, with your thumb registered, wherever you go, you can confirm that it is you. It is for security, it is for KYC. Like you know, for you to borrow from any bank now, you must have your BVN. It helps our credit scoring system.

“The compliance level have been growing. At Fidelity Bank, we first made sure every staff member was registered because you can’t sell what you don’t understand. So that when you are explaining to your customer, you can as well show him or her your BVN.”

The BVN project is an initiative aimed at protecting bank customers and further strengthening the Nigerian banking system. It is an inventiveness of the Central Bank of Nigeria (CBN), in conjunction with the Bankers’ Committee.

The BVN is a number that enables a bank customer to have a single identity in the banking system. It basically ensures that a customer’s identity is not stolen. A customer is only expected to register at one bank, irrespective of the number of accounts he has. The registration of customers is done using biometric technology.

Biometric technology involves the process of recording a person’s unique physical traits such as fingerprints and facial features.  This record can then be used to correctly identify the person afterwards. Once a person’s biometrics has been properly captured, the person is given a BVN. The objective of the BVN initiative is to protect bank customers and reduce fraud. Fraud is reduced because no two people have the same biometric information.

Banks will therefore be able to check the features of a person doing a transaction against the record, which the bank has captured thereby correctly identifying the owner of an account. All bank customers in Nigeria are required to register or enrol for a BVN by June 2015. To enrol, bank customers must visit a branch of their bank and where BVN is given to a person by one bank, it will apply to that same person for any other bank in Nigeria.