1.1 BACKGROUND OF STUDY
The rate at which fraudulent activities is going on in the country these days is becoming unbearable; the federal government of Nigeria and the CBN have being on their toes to resolve the issue of frauds and to boost financial security in most of the Nigerian banking industry; because all these issues the central bank of Nigeria on February, 2014 made it compulsory that all account holders should have a bank verification number so as to enable the account holder to have a single identity in all the banks in Nigeria; all he or she need to do is to link it with his or her accounts. The essence of this system is to help the bank in the protection of their customers from theft and other financial/ economic crimes growing in the banking industry (Orji, 2014). The Bank Verification Number (BVN) is a great step taken by the Central Bank of Nigeria, to strengthen the financial security and order in the banking sector of Nigeria. One of the importance of the BVN is that transactions will be safer once all protocol is dully observed. The essence of this BVN exercise is to ensure that bank transactions are safer and fraudulent transactions are minimized, if not totally eliminated. The central bank of Nigeria have put in a lot of effort to see the success of this exercise, but the general public do not know the importance of the bank verification number; but they started seeing the importance of the bank verification number when the central bank made it clear that the exercise will stop by October 2015. The bank verification number system uses biometric technology to register customers in the banking sector. It records these physical features which are unique to individual’s fingerprints and the face; this technique was made effective because every individual has his or her own unique finger prints. The record would be used to identify the person afterwards. Once a person’s biometrics have been recorded, and BVN issued the account would be accessed through BVN. The major objectives of the initiative are to protect bank customers, reduce fraud and strengthen the Nigerian banking system. Biometric enrolment is helpful to people who cannot read and write. Their finger prints and pictures would serve the same purpose as signatures. Multiple account holders would be covered with a single registration in any of the banks where they have accounts. BVN will help the banking system reduce situations where loan defaulters, for instance, move from one bank to the other and the banks extend new credits to them, without knowing their history. Banks would be able to track transactions across all banks in Nigeria with more ease.
1.2 STATEMENT OF THE PROBLEM
Without doubts, the Nigerian banking sector has contributed to the growth and development of the Nigeria. The Nigerian banking sector has maintained the inflow of money in the country so as to stabilize the country’s economy. According to Udenze, 2014; stated that growth in this sector has been reduced due to high cases of economic and financial crimes; fraud and money laundry have significant effect on the financial security in the Nigeria banking industry. They have caused damage to the reputation of the image of the country, loss of FDI, poor infrastructural development, dwindling confidence and distortions in our political as well as financial systems, among other things. In view of these crises crimes perpetuated by cyber thieves, the mandatory bank verification number exercise embarked by various banks nationwide has also caused congestions in banking halls. Although the exercise commenced since February, 2014, the fire brigade approach of most Nigerians has warranted most bank halls to be filled to its maximum capacity. Queues in some banks even extended outside the banking hall. This development has caused confusion in some banking halls as other transactions are placed on hold due to inadequate staff to attend to clients or delayed indefinitely.
1.3 RESEARCH OBJECTIVES
The main object of the research work is to elicit information on the impact of BVN on financial security in Nigerian Banks. Specific objectives of the study are:
1. To monitor effect of the bank verification number on the level of financial crimes in Nigeria
2. To give everyone access to a single account
3. To help limit multiple account by a single owner.
4. To investigate the role of the central bank of Nigeria in the implementation of the bank verification number system
5. To investigate the impact of bank verification number system on the level of financial safety in the Nigerian banks
1.4 RESEARCH QUESTIONS
1. What are effects of the bank verification number on the level of financial crimes in Nigeria?
2. What is the impact of bank verification number system on the level of financial safety in the Nigerian banks?
3. What are roles of the central bank of Nigeria in the implementation of the bank verification number system?
1.5 RESEARCH HYPOTHESIS
H0: The introduction of BVN has no significant effect on financial security
H1: The introduction of BVN has significant effect on financial security
H0: There is no significant relationship between BVN and the level of congestion in the bank
H1: There is significant relationship between BVN and the level of congestion in the bank
1.6 SIGNIFICANCE OF THE STUDY
The research work is a very important one as it will investigate the the role of the central bank of Nigeria in the implementation of the bank verification number system, the study will discuss the imnportance of bank verification number, the bank verification number initiatives will help limt every one to single account so as to monitor the level of financial crimes in Nigeria. The study will also discuss the role of the central bank of Nigeria in the implementation of bank verification number system. Finally the study will discuss the role of bank verification number on the level of security.
1.7 SCOPE OF STUDY
Th research work is limted to the study of the impactof BVN on financial security in Nigeria banks.
1.8 LIMITATION OF STUDY
FINANCIAL CONSTRAINTS: insufficient finance has made the research unable to get all the necessary materials needed for the purpose of the research work but the researcher was able to make do with the materials available to get meaningful information concerning the research topic
TIME CONSTRAINTS: the researcher being a student is involved in other departmental activities like seminar presentation and assignments but was able to meet up with the time allocated for the completion of the research work
1.9 DEFINITION OF TERMS
BVN: Bank Verification Number
CBN: Central Bank of Nigeria
Biometrics: Biometrics refers to identification of an individual based on physiological attributes- fingerprint, voice, facial features etc.
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