Globally, technology has become an enabler for economies and industries. It is transforming governance, agriculture, health, oil and gas, and financial services, among other sectors, by driving effective and efficient performance largely for the benefit of the governed, consumers and corporations. That’s why economies or industries with penchant for adopting innovative technology to drive their process are rated much more competitive than their counterparts, which do not or are slow to embrace technology.

Industries in technologically-advanced economies are continuously expanding the frontiers of product and service delivery by leveraging consumer insights distilled from transaction history of the customer with the help of technology. Remarkably, technology firms, financial markets players and consumer goods manufacturers are at the forefront of this trend globally. For these industry segments, the use of technology to determine future consumer behavior is the new frontier for mass market engagement.

Nigeria, the epicenter of Africa’s growth, projected to overtake South Africa to become the continent’s largest economy by 2015, is on the threshold of economic transformation across all sectors with the influx of global corporations into the market. In spite of its huge potential, the Nigerian market lacks a standardized identity management system and database, the key social infrastructure for robust credit administration needed to spur mass market engagement and a much desired growth of all sectors of the economy.

In developed markets, a database technically known as Know Your Customer (KYC), which is frequently updated and also accessible to all financial markets players, is at the core of their robust credit administration system. It provides insight about the customer’s credit history driving mass market engagement for technology products, financial services and fast moving consumer goods.

Basically, KYC refers to detailed and authenticated information required by financial institutions and other regulated companies before conducting business with a customer. Unlike technology firms and consumer goods manufacturers, financial institutions in Nigeria, especially banks, are merely scratching the surface of the country’s retail potential due to the absence of a non-repudiable identity management system.

Millions of Nigerian adults do not have valid identification means, and are denied access to basic financial services before the intervention by the Central Bank of Nigeria (CBN) which ensured that Voter’s Registration Cards are accepted in lieu of identity cards for payments transaction by banks. The inability of banks to authenticate the identity of a large number of customers has restricted their access to credit thereby stifling socio-economic growth and development.

Leveraging biometric technology, the CBN and the Bankers’ Committee are setting machinery in motion to tackle the KYC inefficiencies stifling national banking penetration and restricting access to basic financial services and micro-credit for millions of Nigerians. Deployment of the banking industry biometric KYC technology by identity management and transaction payments firm, Chams Plc, in partnership with Dermalog Identification Systems, will commence in February 2014.

Highlighting the benefits of the banking industry biometric KYC deployment, CBN Governor, Lamido Sanusi, stated that the move was in furtherance of the regulator’s bid to achieve more reliable, technology-driven, fraud-free banking services delivery in the country. According to Sanusi, 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 from a point of transaction device.

Justifying the need for the project, since there are other biometric projects in the works in the country, Sanusi explained that the CBN and the banks decided to embark on the project as a proactive strategy to enhance the integrity of banking services delivery by building a reliable customer identification system which, he said, would help in complementing the other projects being embarked upon by various government agencies, including the National Identity Card project, to build a single identification database for all Nigerians.

Commenting on the initiative, Demola Aladekomo, Group Managing Director of Chams Plc said, “The implementation of a biometric authentication solution for the banking industry by the Central Bank and Bankers Committee will transform Nigeria’s financial services landscape by bridging the gap between the formal and informal economy. This policy initiative can only lead 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 policies 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.”

Affirming the need for improved KYC in the banking industry, recent research data on e-fraud in Nigeria by the Financial Institutions Training Centre (FITC) indicate that banks lost a total of N159 billion to electronic fraud between 2000 and first quarter of 2013. This was partly linked to ineffective banking industry KYC standards.

Luqman Balogun, Project Director, Bankers’ Committee KYC Biometric Project said, “The deployment of a KYC biometric system by the Central Bank of Nigeria and the Bankers’ Committee will ameliorate the customer identification and verification challenges facing banks and other financial institutions in Nigeria due to the existence of numerous identity systems that are not standardized and integrated into centralized database for customer identity verification.”

The banking industry biometric KYC project was necessitated by the absence of a central and standardized identity database with supporting infrastructure for identification and verification of customers in Nigeria’s fast growing financial markets. More so, lack of standardized identification system also deny 34.9 million Nigerian adults – about 39.7 percent of the adult population –  access to basic financial services. This project will improve access of millions of Nigerian adults to a range of secure, convenient and high quality financial products and services such as savings, credit, insurance, payments and pension, which were denied adults in the low income segment. It will also prevent identity theft, financial fraud, money laundering and terrorist financing.

Globally, technology has become an enabler for economies and industries. It is transforming governance, agriculture, health, oil and gas, and financial services, among other sectors, by driving effective and efficient performance largely for the benefit of the governed, consumers and corporations. That’s why economies or industries with penchant for adopting innovative technology to drive their process are rated much more competitive than their counterparts, which do not or are slow to embrace technology.

 

Industries in technologically-advanced economies are continuously expanding the frontiers of product and service delivery by leveraging consumer insights distilled from transaction history of the customer with the help of technology. Remarkably, technology firms, financial markets players and consumer goods manufacturers are at the forefront of this trend globally. For these industry segments, the use of technology to determine future consumer behavior is the new frontier for mass market engagement.

 

Nigeria, the epicenter of Africa’s growth, projected to overtake South Africa to become the continent’s largest economy by 2015, is on the threshold of economic transformation across all sectors with the influx of global corporations into the market. In spite of its huge potential, the Nigerian market lacks a standardized identity management system and database, the key social infrastructure for robust credit administration needed to spur mass market engagement and a much desired growth of all sectors of the economy.  

 

In developed markets, a database technically known as Know Your Customer (KYC), which is frequently updated and also accessible to all financial markets players, is at the core of their robust credit administration system. It provides insight about the customer’s credit history driving mass market engagement for technology products, financial services and fast moving consumer goods.

 

Basically, KYC refers to detailed and authenticated information required by financial institutions and other regulated companies before conducting business with a customer. Unlike technology firms and consumer goods manufacturers, financial institutions in Nigeria, especially banks, are merely scratching the surface of the country’s retail potential due to the absence of a non-repudiable identity management system.

 

Millions of Nigerian adults do not have valid identification means, and are denied access to basic financial services before the intervention by the Central Bank of Nigeria (CBN) which ensured that Voter’s Registration Cards are accepted in lieu of identity cards for payments transaction by banks. The inability of banks to authenticate the identity of a large number of customers has restricted their access to credit thereby stifling socio-economic growth and development.

 

Leveraging biometric technology, the CBN and the Bankers’ Committee are setting machinery in motion to tackle the KYC inefficiencies stifling national banking penetration and restricting access to basic financial services and micro-credit for millions of Nigerians. Deployment of the banking industry biometric KYC technology by identity management and transaction payments firm, Chams Plc, in partnership with Dermalog Identification Systems, will commence in February 2014.

 

Highlighting the benefits of the banking industry biometric KYC deployment, CBN Governor, Lamido Sanusi, stated that the move was in furtherance of the regulator’s bid to achieve more reliable, technology-driven, fraud-free banking services delivery in the country. According to Sanusi, 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 from a point of transaction device.

 

Justifying the need for the project, since there are other biometric projects in the works in the country, Sanusi explained that the CBN and the banks decided to embark on the project as a proactive strategy to enhance the integrity of banking services delivery by building a reliable customer identification system which, he said, would help in complementing the other projects being embarked upon by various government agencies, including the National Identity Card project, to build a single identification database for all Nigerians.

 

Commenting on the initiative, Demola Aladekomo, Group Managing Director of Chams Plc said, “The implementation of a biometric authentication solution for the banking industry by the Central Bank and Bankers Committee will transform Nigeria’s financial services landscape by bridging the gap between the formal and informal economy. This policy initiative can only lead 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 policies 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.”  

 

Affirming the need for improved KYC in the banking industry, recent research data on e-fraud in Nigeria by the Financial Institutions Training Centre (FITC) indicate that banks lost a total of N159 billion to electronic fraud between 2000 and first quarter of 2013. This was partly linked to ineffective banking industry KYC standards.

 

Luqman Balogun, Project Director, Bankers’ Committee KYC Biometric Project said, “The deployment of a KYC biometric system by the Central Bank of Nigeria and the Bankers’ Committee will ameliorate the customer identification and verification challenges facing banks and other financial institutions in Nigeria due to the existence of numerous identity systems that are not standardized and integrated into centralized database for customer identity verification.”

 

The banking industry biometric KYC project was necessitated by the absence of a central and standardized identity database with supporting infrastructure for identification and verification of customers in Nigeria’s fast growing financial markets. More so, lack of standardized identification system also deny 34.9 million Nigerian adults – about 39.7 percent of the adult population –  access to basic financial services. This project will improve access of millions of Nigerian adults to a range of secure, convenient and high quality financial products and services such as savings, credit, insurance, payments and pension, which were denied adults in the low income segment. It will also prevent identity theft, financial fraud, money laundering and terrorist financing.