A financial expert, Mr Ayotunde Bally, has faulted the Central Bank of Nigeria (CBN) directive on the inclusion of social media handles as part of commercial bank’s Know Your Customer (KYC) procedures.
Bally, Chief Executive Officer of Arvofinance, a fintech company, expressed the reservation in an interview with the News Agency of Nigeria (NAN) on Tuesday in Lagos.
NAN reports the CBN issued the directive in its recently gazetted legislation titled, ‘Customer Due Diligence Regulations 2023’.
The bank said the objective of the regulation is to prevent financial crimes and terrorism while boosting the precision and thoroughness of customer identification.
According to the CBN, financial institutions will be required to identify their customers, regardless of whether they are permanent or occasional clients.
He urged the CBN to mandate banks to use already collected data sources like the Bank Verification Number (BVN), National Identity Number (NIN) and Tax Identity Number (TIN) to get more information about their customers.
The expert said that the new regulation would leave many Nigerians vulnerable to financial fraud as well as complicate financial inclusion in the country.
“Social media handles reveal a customer’s true identity and make it easier for fraudsters to carry out fraudulent activities.
“While BVN, National Identity Number, and Tax Identity Number provide an extra layer of security, social media handles break down that layer and increase the risk of bank fraud.
“Ultimately, people that will be mostly affected will be those at the Bottom of the Pyramid (BoP) as it will be difficult for them to access financial services,” he said.
The expert stressed that including social media handles as a requirement would only cause confusion and make the process more complicated as banks already collected NIN, BVN, and TIN as KYC.
He, therefore, urged the apex bank to focus on financial inclusion rather than implementing policies that would create more hurdles for Nigerians.
He said, “The use of financial credit modeling experts may prove to be a more effective approach.
“It is essential to engage stakeholders and the public in addressing these challenges to make financial inclusion a reality for all.
“This policy will only widen the gap and increase the already significant financial exclusion rate in Nigeria.
“It is imperative to educate the public on the potential problems that may arise from this social media handle as a KYC requirement and advocate for more innovative and inclusive solutions for a better financial future.”
This regulation, he added, could exacerbate financial exclusion in the country as it was already a big problem.
“Firstly, a significant number of Nigerians are financially excluded, particularly those living in rural areas.
“They lack access to commercial banks due to poor infrastructure and high transportation costs.
“Additionally, many are not tech-savvy and cannot afford smart phones or the high cost of data in Nigeria.
“This new policy will further complicate financial inclusion efforts and disenfranchise more people,” he said.
NAN reports that Arvofinance is a fintech company that provides quick online loans to consumers without collateral or guarantors.(NAN)