Raheem Akingbolu writes on how the Biometric Matching Solution (BMS), which was recently introduced for customer identification, will further reduce incidences of identity theft and improve service standards in the banking industry.
Banks in the country have commenced use of Biometric Matching Solution (BMS) for customer identification and verification from
It was conceived by Central Bank of
Major benefits of the initiative are improved banking industry Know Your Customer (KYC) standards, fraud prevention, and unrestricted access to financial access by millions of Nigerian adults in the informal sector that lack standard means of identification.
Other benefits of the project are emergence of a more robust lending regime, access to micro-credit for small businesses, as well as improved business performance and profitability for banks in the country.
Alignment with global practice The initiative is in alignment with developments in
Basically, Know Your Customer in banking is the process of screening a customer, both initially and periodically by collecting detailed and authenticated information before allowing the customer to conduct banking transactions. For banks, both in developed and emerging financial markets, serving their customers well while at the same time complying with KYC legislation and regulation is a considerable challenge.
Ongoing KYC monitoring, which is a compliance requirement, can be used to uncover customer needs over time. This can be used to improve business performance, increase cross-sales and profitability because of the capacity of business to understand, predict and shape future behaviour of the customer."
He added: "For the banking industry at large, a KYC utility will simplify and fast-track customer acquisition process, enabling banks of all sizes to create positive customer experience and increase revenue from a large unbanked adult segment.
This will bridge the gap between the formal and informal economy leading to accelerated socio-economic growth because it removes all identification barriers preventing millions of Nigerians from having access to basic financial services, and will by implication boost access to micro-credit."
Aladekomo disclosed that beyond boosting financial inclusion, the initiative will also enhance security of funds of bank customers, shorten transaction time, and minimize use of cheques and cards. He added that "Technology driven KYC initiatives are being implemented globally to prevent identity theft, financial fraud, money laundering and terrorist financing. Both developed and developing countries have and are enacting laws on KYC, owing to its huge benefits."
Benefits to banks Highlighting its benefits, the outgoing
The first phase of the project would connect the Central Data point to at least one branch of each bank, the CBN and the Nigeria Inter-Bank Settlement System (NIBSS) within 90 days. This will be followed by the second phase, which will ensure full capture of biometric details of all bank customers nationwide within 12 months.
The project is expected to provide a centralised platform through which banks may enroll and uniquely verify the identity of each customer for KYC purposes, perform credit checks, verify customer's integrity and to authenticate customers using a biometric point of transaction device.
Affirming the need for improved KYC in the banking industry, recent research data on e-fraud in
On his part, the Chief Executive Officer of
Balogun said: "The deployment of the Biometrics Matching Solution by banks provide additional layer of protection for customer information, and serves as a buffer from the risks associated with identity theft. On the part of banks, unfolding financial market realities necessitate the adoption of a system that enables growth, manages cost and controls risk. Accurate identification of customers is a major requirement for achieving these success factors.
"With the integration of a biometric solution to the core banking system, banks will engage in biometric enrollments at the time of account setup, loan application or at the time of transaction execution. Once captured, these enrollments can be used to validate the identity of a customer across multiple channels including in-branch, online and ATM banking, making it easier for customers to take full advantage of the bank's offerings.
Banks can use this structured knowledge of re-occurring customer choice/behavior, to identify and meet needs for improved business performance. This initiative also provides a holistic and synced view of banked Nigerians to the banks across board. Banks will also have up-to-date information on fraudulent customers, and those at credit risks, shielding the industry from revenue loss to financial criminals."
In terms of benefits to the national economy, the project will boost financial inclusion, improving access to banking product and services in semi-urban and rural areas, thus raising household incomes through improved saving culture and access to micro-credits, which will in turn boost local industries and the national economy in the long term.
In no small measure, the deployment of a KYC biometric system by the Central Bank of
More so, the use of biometric for identification and verification during financial transactions is the next frontier in secure identity management and personalization for both advanced and developing financial markets, and the Nigerian banking industry is leapfrogging others into the future with this initiative. It is a first in the global financial markets, and the regulators of non-banking financial sectors such as the insurance, pension, mortgage banks and capital market must leverage on this beneficial policy initiative
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