Decoding the Tiered KYC reformation — Vol.2 (Designer Edition)
Embark on a bouncy journey into the evolving world of Tiered KYC. Following my recent article, “The thrilling world of Tiered KYC (dESIGNER eDItion) volume 1,” explore the latest twist — a strategic update to Tier 1 accounts by the Central Bank of Nigeria. While a smart move, it comes with its share of challenges, centering around NIN and BVN as the key players in customer onboarding. Uncover the intricacies of compliance for Tier 1 wallet holders and the added layers for Tier 2 and Tier 3. Join me in decoding the dynamic landscape where finance meets regulation in the Tiered KYC saga.
In pursuit of fortifying financial system stability, a pivotal initiative has been undertaken to comprehensively review and enhance the Know Your Customer (KYC) protocols within financial institutions overseen by the Central Bank of Nigeria (CBN). Concurrently, a strategic amendment has been introduced to Section 1.5.3 of the regulatory framework governing Bank Verification Number (BVN) Operations and Watch-List for the Nigerian Banking Industry (The Guidelines). Notably, compliance is now compulsory for individuals holding Tier 1 bank accounts and wallets, necessitating the possession of either BVN or NIN.
In addressing critical considerations outlined by the Central Bank of Nigeria (CBN) for KYC design, key conditions have been unveiled.
Dual Mandate for Tier 1: The directive is crystal clear — mandatory BVN and/or NIN for Tier 1 accounts. Why not elevate security measures by collecting both? It’s not just a recommendation; it’s a prudent approach to fortify the KYC foundation.
Consistency Across Tiers: For Tier 2 and 3 accounts, the call for BVN and NIN compliance echoes unchanged. The logical move? Collect this vital information upfront. Why wait? Let’s streamline the process from the outset, ensuring a seamless and secure onboarding experience.
Electronic Onboarding Evolution: The process for account opening evolves by electronically sourcing BVN or NIN-related information from the NIBSS BVN or NIMC’s NIN Databases. This data assumes the role of primary information for onboarding new customers.
Let us unveil the intricate dance of customer onboarding — a seemingly meaningful yet challenging journey. Behold, the hastily crafted user flow I present to you. This unique process kicks off with the utilization of NIN, a potentially precarious move for Fintechs. The question looms — is NIN stable enough for this groundbreaking development? And then there’s BVN, adding another layer to the complexity. Dive into the process flow and join me in navigating the delicate balance between innovation and stability. What are your thoughts on this unfolding saga?
Deconstructing the user flow into visual screens was a breeze for me — after all, design is my forte. But let’s set aside the accolades and plunge into the freshly anointed updates bestowed upon Tier 1, I call it The Handshake.
As per the flow, the customer initiates the signup process by providing their phone number, triggering the dispatch of an OTP. To solidify the identity verification, the customer is then prompted to provide a NIN. Witness the pivotal role NIN plays in the intricate dance of customer onboarding — a game-changer that demands top-notch services and efficiency. It’s time to shake off any complacency and rise to the occasion. Are they ready for the challenge?
Tier 1
Meet the former financial inclusion merchant, once a potential threat to Fintechs. Today, our spotlight is on the revamped Tier 1 accounts.
Should the NIN provided earlier align seamlessly with the phone number, customers gain the green light to select their preferred account type. Our focus here? The inception of the Tier 1 savings wallet.
With a daily cumulative transaction limit of 50,000 Naira and a cumulative balance cap of 300,000 Naira, Tier 1 accounts are your secure haven.
Before ascending to Tier 1 (mind you, there’s no Tear 0), customers must provide the following:
- Personal Information: Full name, gender, date of birth, passport photograph
- BVN
- Address details
Those who pass muster find themselves on Level 1, a realm also known as Tier 1. Welcome to the enhanced face of financial inclusion.
The Design
Tier 2
now, the climb to Tier 2. According to the CBN, a Tier 2 wallet is non-negotiable without a BVN. Fortunately, since we’ve already amassed the necessary data during the Tier 1 onboarding, our journey to Tier 2 promises to be swift. With a daily transactional playground of 200,000 Naira and the ability to store up to 500,000 Naira in your financial arsenal. The required data for this stage includes:
- Verification of Face: Embracing the power of AI, Fintechs are innovatively employing facial recognition for customer verification.
- ID Card Submission and Verification: Another nod to Fintech ingenuity, utilizing AI to streamline the submission and verification of ID cards. This marks the seamless progression to the next tier, proving that technology is at the forefront of this evolutionary climb.
The Design
Finally, Tier 3
Tier 3 wallets not only boast the daily cumulative transaction limit of a staggering 5,000,000 Naira but also offer an unlimited cumulative balance. It’s not just security; it’s financial freedom.
To join this echelon of financial autonomy, the checklist unfolds as your passport to Tier 3 excellence:
- Proof of Address (Utility Bills or Innovative Approaches): Evidence that anchors you in the realm of Tier 3 financial freedom.
Effective immediately, the implementation of this refined procedure leaves no room for compromise — no Tier 1 accounts or wallets should be ushered in without the protective shield of BVN or NIN. It’s a swift move toward heightened security and efficiency in the dynamic landscape of financial onboarding.
As we conclude this exploration into the dynamic landscape of Tiered KYC and the transformative updates to banking protocols, I invite you, dear reader, to join the conversation. What are your thoughts on the evolving role of NIN and BVN in reshaping customer onboarding? How do you envision the intersection of Fintech innovation and regulatory compliance in the financial landscape? Share your insights, experiences, and perhaps even your predictions for the future of Tiered KYC. The dialogue continues, and your perspective is a valuable contribution to the ongoing narrative of progress and adaptation in the realm of modern banking.
Thank you for giving me your precious time.
