Goodbye Paper Pledges: CBN Pushes to Scrap Bank Reference Rule for Current Accounts

 

​The Central Bank of Nigeria (CBN) is calling for an end to one of the most persistent and outdated banking rituals in the country: the requirement for an applicant to provide two satisfactory bank referees to open a current account. For decades, this rule has been a sacred, if frustrating, fixture in the Nigerian financial sector, relying on personal trust and paper forms as a substitute for verifiable data. However, the CBN now rightly argues that this relic of the past has outlived its usefulness and, worse still, actively hinders the nation’s crucial goals of financial inclusion and banking modernization.

​A Relic of the Analog Age

​The bank referee system originated from older prudential assumptions rooted in the Banks and Other Financial Institutions Act (BOFIA). In an era before digital infrastructure, banks had little reliable information beyond staff intuition and paper files. A referee—someone who already held a current account—acted as a human placeholder for identity verification, assuring the bank that the applicant was credible and easily reachable should any issue, such as a bad check, arise. In a world of shaky records and unreliable addresses, this analogue approach provided a necessary, if basic, form of risk assurance.

​Today, however, the financial landscape has been entirely transformed by technology. The referee requirement has evolved from a meaningful safeguard into what many consider administrative "theatre," offering virtually no measurable protection against fraud. Instead, it introduces unnecessary friction into a process that should be streamlined.

​The True Cost of Outdated Rules

​The requirement is no longer harmless; it actively creates significant barriers for individuals and businesses seeking to engage with the formal banking system:

​Excluding New Market Entrants: Many new businesses, entrepreneurs, or young professionals, particularly those who have only held savings accounts, struggle to find two individuals who already operate current accounts and are willing to sign as referees. This limitation disproportionately affects Small and Medium Enterprises (SMEs) and those newly entering the formal economy.

​Hurdles for the Diaspora: Nigerians living abroad (the diaspora), who maintain properties, pensions, and investments back home, face immense procedural difficulty trying to meet a requirement designed for people who live close enough to visit their referees.

​Foreign Investment Deterrent: Foreign investors and companies opening Nigerian accounts encounter this procedural oddity, which does not exist in mature peer markets like the UK, US, or Singapore. This regulatory anomaly makes the country seem less attractive for capital flow.

​Administrative Noise: For customers whose identity, address, and transaction history are already meticulously tracked by modern systems, collecting two more handwritten signatures adds noise rather than value to the onboarding process.

​The Superior Digital Alternative: Data Over Handshakes

​The Central Bank’s push to phase out the reference rule is supported by the fact that Nigeria now possesses a robust digital infrastructure that provides far more accurate and reliable identity assurance. The modern alternatives already in place render the referee system redundant:

​BVN (Bank Verification Number): This biometric identity links a customer’s details across all financial institutions, creating a consistent and verifiable behavioural trail.

​NIN (National Identity Number): This provides biometrics and comprehensive demographic data, serving as a hard-to-game foundation for identity.

​CAC Digital Portal: For corporate accounts, the Corporate Affairs Commission’s digital systems provide transparent, verifiable information on directors and ownership structures.

​Credit Bureau and Open Banking: With customer consent, banks can now access verified transaction patterns, cash flow behavior, and account histories across the entire financial ecosystem. Risk modeling today depends on real-time analytics, not personal endorsements.

​Digital banks have already proven that current accounts can be opened and risks managed effectively using just these tools. Technology not only streamlines the process but actually lowers fraud through stronger identity verification and behavioural transparency than any paper reference ever could.

​A Modernized Future for Nigerian Banking

​As the CBN continues to champion initiatives like financial inclusion and welcomes foreign investment, eliminating the outdated bank reference is a crucial and overdue step. The infrastructure that makes this requirement obsolete—from BVN and NIN to robust credit reporting—was largely mandated by the CBN itself. It is time the regulation catches up with the technology. Letting modern digital verification methods do the heavy lifting will make banking more accessible, more efficient, and better aligned with global best practices, ensuring a straightforward and modern experience for all Nigerian bank customers.