Spanish banking giant BBVA has an early adopter when it comes to exploring and using blockchain in its legacy business, being the first global bank to use its blockchain network, built with distributed ledger architecture, to issue a corporate loan earlier this year. Now it is taking the next step: BBVA has inked a partnership with Repsol, the Spanish energy giant, to build blockchain-based corporate finance solutions, and as first step BBVA has transferred a credit facility of €325 million ($375 million) using its blockchain network.
BBVA says that this is the first time that distributed ledger technology has been used to issue a credit facility, and as with the loan it issued, the incentive for doing so is to reduce the time it takes to do this: the process takes “a matter of hours rather than days in a fully transparent operation that allowed the tracking and approval of the documentation involved.” It said “different types of blockchain” were used in the transfer, including a Hyperledger private blockchain network, with the signed contract registered using the Ethereum test network through a hash, a “unique document identifier that guarantees its immutability”.
“This operation is the fruit of BBVA’s pursuit of integrating innovative and disruptive financial products for corporate clients and to offer them the best solutions that meet their needs,” said Alicia Pertusa, the head of strategy and blockchain at BBVA, in a statement. The company also announced this week that it wants to extend its blockchain loan facilities and will start to test negotiating and contracting syndicated loans on the network — again, to reduce the time and steps it takes for these, which can be particularly long, given that they involve multiple parties.
Repsol and BBVA are large and very incumbent players, and the sums of money we are talking about here are, relatively speaking, small beer for them. But at the same time, they are all facing the threat of disruption from smaller and more nimble organisations, and so this could be one way of jumping into the fray of innovation to improve how they work, if not find new business opportunities altogether.
“Repsol wants to actively take part in collaborative environments. Blockchain is a disruptive technology that is here to stay and the agreement with BBVA advances our strategy of driving digitization in all areas of our activity”, said Nuria Ávalos, head of Blockchain and Digital Experimentation at Repsol, in a statement.
Repol, like BBVA, has earmarked blockchain as a technology that it wants to explore further, both for helping to run its energy business more efficiently, and to underpin the extensive financing operation that it runs around that effort.
It’s notable to see how legacy players increasingly willing to put a little money on the table to test out new technologies and approaches like blockchain, which initially gained popularity through grassroots efforts before being taken up by startups — and not without a very large dose of controversy and ongoing questions, particularly around cryptocurrencies that are built on blockchain ledgers and how they should be regulated. Even BBVA’s own leaders have admitted as much.