The new way out in the face of the advance of delinquency

The situation in Argentina’s financial sector has reached a critical point, with nearly five million individuals facing unpaid debts. The rate of overdue loans continues to rise, reaching over 17% of the total credit stock, while approximately 35% of these credits have been classified as "irrecoverable," meaning they are more than 12 months behind schedule. These figures come from the Debt Map compiled by the Buenos Aires City Center for Studies (CEC). As the crisis deepens, both banks and fintech companies are being forced to rethink their lending strategies. In response to the growing default rates, institutions have tightened credit requirements and imposed stricter limits on financing through cards. Looking ahead, there is a shift toward tailored approaches based on customer segments and the intended use of funds. Credits backed by some form of collateral are emerging as a key tool to reduce risk and interest rates, benefiting both lenders and borrowers. This trend is driven by the need to adapt to a market where traditional credit histories are no longer sufficient. Tomás Fulop, co-founder of Brain Network, a consultancy specializing in financial services, highlights the potential of dynamic guarantees. He suggests moving away from static forms of security toward more fluid options that evolve alongside the borrower's repayment behavior. “It doesn’t make much sense for a guarantee to remain fully encumbered until the last payment,” he explains. “A dynamic system would allow the guarantee to adjust as the loan balance decreases, offering greater flexibility.” Reba, a licensed financial institution under the Central Bank of Argentina (BCRA) and part of Grupo Transatlántica, is exploring this model. Vanesa Di Trolio, Reba’s Business Manager, notes that using dollars as collateral significantly reduces operational risk, resulting in lower and more competitive interest rates for users. She adds that the financial system is increasingly relying on the possibility of presenting a guarantee, enabling more attractive credit lines. Similarly, Brubank, a fintech with a bank license, offers a Visa card that requires customers to maintain dollar deposits as collateral. The available spending limit in pesos depends on the value of the deposit, eliminating the need for a credit history or score. This approach reflects a broader movement toward alternative credit models that prioritize liquidity and security. Traditional banks, while still hesitant to introduce such products, acknowledge the necessity of developing customized tools for different types of clients. Meanwhile, cryptocurrency exchanges like Binance, Nexo, Lemon, and Ripio are already offering advances against deposited cryptocurrencies or stablecoins, allowing users to access cash without selling their assets. This option provides a way to meet liquidity needs without compromising holdings. One crucial factor to consider is that these types of loans directly impact household wealth. Proper advice and risk assessment should be central to both borrowers and lenders to ensure that solutions do not exacerbate existing problems. The challenge lies in balancing innovation with caution, ensuring that new mechanisms serve rather than harm the financial stability of families. Credit in the Stock Market The best example of secured credit is the securities pledge. It is a tool that allows investors to borrow against the value of their stocks, providing immediate liquidity without liquidating their holdings. This mechanism is particularly relevant in markets where volatility is high and traditional credit options are limited. By leveraging assets, borrowers can access capital while maintaining control over their investments.