BBVA Determines Corporate Interest Rates by Quantifying Digital Adoption

A bank in Europe, BBVA, has made a $350 million revolving credit facility to Singapore-based Olam International structured in a way that the interest rate on the credit will decline as the borrower improves on its digital-nativity and -readiness, across 32 digital business milestones the bank has established. BBVA is offering this product based on its understanding that the more digital a company evolves, the better it performs on key metrics like staff engagement, customer acquisition and reduced attrition. In other words, the company does better in the business as it becomes more digitally driven in its operations. Simply, it moves to the edges for higher values.

“What we are increasingly seeing is that the more digitally advanced a business is, the better it performs, both financially, but also in terms of key metrics like staff engagement, customer acquisition and reduced attrition,” said Ricardo Laiseca, BBVA’s head of global finance.

“We see the development of these digital loan facilities as a way to tangibly support and encourage other businesses to evolve as we have done,” Mr Laiseca said. BBVA has long professed the goal of becoming not just a digital bank but a “digital company”.

But going digital is not cheap: U.S. banking giant, JP Morgan Chase, spends about $600 million yearly on cybersecurity and employs 3,000 dedicated people just for cybersecurity. So, that digital transition for any company is a real commitment to a future.

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