Time to Drop the Paper: Why the CBN Must Scrap Current Account Bank References
The long-standing tradition of requiring bank references for opening a current account in Nigeria is now widely considered an obsolete ritual. For decades, this requirement, which often sees account officers pleading with customers to “help someone” by signing a reference form, served as an analogue safeguard in an era defined by paper files and high transactional uncertainty.
However, the rapid digital transformation of Nigeria’s financial sector has rendered the bank reference not only useless but actively counterproductive, introducing unnecessary friction for legitimate customers, foreign investors, and the diaspora. The central argument is clear: the Central Bank of Nigeria (CBN) must acknowledge the powerful digital tools it has already mandated and officially phase out this regulatory relic.
Analogue Relic in a Digital Age
The referee system finds its roots in old prudential assumptions under the Banks and Other Financial Institutions Act (BOFIA). In a time when reliable public records and automated identity checks were nonexistent, a referee acted as a human proxy for trust and verifiability. A signature from an acquaintance was the bank’s best assurance that the applicant was credible and traceable, particularly when dealing with cheque issuance risk.
That banking era is definitively gone. Nigeria’s current financial ecosystem is built on a robust digital infrastructure that provides far superior identity assurance and risk assessment:
Bank Verification Number (BVN): Links customer identities and behavioral history across all financial institutions.
National Identification Number (NIN): Provides verified biometrics and core demographic data, making identity manipulation extremely difficult.
Corporate Affairs Commission (CAC): Offers transparent digital records for corporate applicants, detailing directors and ownership structures.
Open Banking: Allows banks, with customer consent, to access real time, verified transaction patterns, cashflow behavior, and account histories across the entire ecosystem.
These modern tools not only outperform a handwritten referee signature but make the requirement feel antiquated, resembling a “regulatory souvenir” rather than a meaningful safeguard. Risk modelling today depends on sophisticated real time analytics , not personal endorsements.
The Cost of Unnecessary Friction
The reference requirement is not merely harmless administrative theatre; it imposes real economic and procedural costs, actively hindering Nigeria’s financial inclusion and investment goals.
1. Hurting the Diaspora and Foreign Investors
Nigerians in the diaspora, who maintain critical financial ties at home (property, pensions, investments), face significant difficulty fulfilling a requirement designed for local residents. They struggle to find credible referees who live close enough to sign paper forms, making essential banking tasks tedious and frustrating.
Similarly, foreign investors are confronted with a procedural oddity that does not exist in any peer market globally—from the UK and US to Singapore and South Africa. This requirement forces foreign companies and their representatives to waste time hunting for referees, even when their sophisticated corporate documentation is easily verifiable through the CAC and international anti money laundering (AML) checks. This friction hardly helps the country’s efforts to attract essential foreign direct investment.
2. Undermining Digital Progress
The requirement also creates a regulatory dichotomy within the local market. Digital banks have successfully demonstrated that seamless, low friction onboarding without references is possible, managing risk effectively through BVN, NIN, geolocation intelligence, and real time transaction monitoring. They prove that technology lowers fraud through stronger identity assurance and behavioral transparency, whereas the paper reference offers no measurable protection.
Global Standards and the Path Forward
The global banking picture decisively supports moving away from personal references. Mature financial markets rely on a suite of modern tools for robust customer onboarding:
Digital Identification and Biometrics
Automated Address Verification
Mandatory Source of Funds Checks
Comprehensive Credit Bureau Data
Automated Fraud Detection Systems
Nigeria now possesses and actively refines these very same capabilities, many of which were mandated by the CBN itself. If a bank can confirm who a customer is (BVN/NIN), where they live (improved mapping), how they transact (Open Banking), and whether they present a risk (credit reporting), then collecting two signatures from acquaintances does nothing but introduce noise and delay.
The referee tradition was justified when the country lacked the infrastructure for identity verification at scale. Today, the infrastructure is here and working. As Nigeria strives to expand financial access, attract foreign capital, and truly modernize its banking landscape, phasing out the reference requirement is a practical, overdue step. The CBN should empower modern, digital verification to do the heavy lifting, retiring the paper endorsement ritual once and for all.
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