The global Trade Finance market size is projected to reach US$ 10987510 million by 2027, from US$ 7616520 million in 2020, at a CAGR of 5.4% during 2021-2027. The Trade Finance market space has evolved, with the technological enhancements, switches in corporate behavior, regulatory reforms, and increasing market competition. The world trade finance market size is further expected to be augmented by increasing worldwide import and export. The rise in competition and new trade agreements, and improved inventory management by various companies propel the market growth.
Trade Finance Market Trends
Digitization is expected to fuel the growth of trade finance market size. Trade finance procedures necessitate a large volume of physical paper documentation. As a result, document-related costs account for the bulk of Trade Finance costs. Banks' Trade Finance offerings must be adaptable, flexible, low-cost, and add value to their customers in order to succeed. Through digitization, banks are automating financial and transactional information exchange through pilot projects in smart contracts.
A typical trade transaction goes through numerous compliance checks during its life cycle, with each review racking up costs along the way. Increased automation, along with artificial intelligence (AI) and machine learning (ML), can help trade finance reduce overall operational costs and improve customer experience.
Technologies such as Distributed ledger technology (DLT) will allow stakeholders to digitally share accurate and reliable trade information, while smart contracts supported by DLT will allow automated execution of payments on meeting pre-defined conditions in the contract. This also means that reconciliation will no longer be a worry for banks as the ledger is shared and updated in real-time.
Furthermore, the incorporation of Blockchain, Artificial intelligence (AI), Machine Learning, and Robotic process automation is expected to provide lucrative growth opportunities for the world trade finance market size. The use of blockchain for identity management and know your customer appears to be very promising. AI innovation is also progressing at a breakneck rate. It, too, has a wide range of applications for solving real-world issues. AI may be used to identify transaction efficiency or cross-channel marketing opportunities, ensuring banks are making the best use of their capital.
Another growth-inducing factor is the use of electronic systems, such as optical character recognition (OCR), fast response (QR) codes, and radio frequency identification (RFID) readers, to improve the digitization of trade financing operations. In contrast to conventional methods, these devices help streamline the manual process of document recognition and simplify trade transactions.
Banks act as intermediaries in the commercial finance ecosystem to provide intercompany trade credits to purchasers, sellers, and other trading parties. Business support provided by banks and their ability to mitigate payment risk by buying trade credit insurance boost market growth.
In terms of service types, Trade Finance can be generally divided into Guarantees, Letters of Credit, Documentary Collection, Supply Chain Financing and Factoring. In 2019, the proportion of Letters of Credit is the largest, accounting for about 39%.
Based on type, the Supply Chain Finance segment is expected to grow at the highest rate during the forecast period. Within the banking industry, Supply Chain Financing (SCF) is becoming a more popular vertical. Corporations benefit from SCF's working capital efficiency and cash conversion period advantages. It also gives banks the chance to form long-term partnerships and cross-sell goods. Data is gathered from industry analysts and peer analysis firms.
The key players include BNP Paribas, Bank of China, Citigroup Inc, China Exim Bank, ICBC, JPMorgan Chase & Co, Mizuho Financial Group,Standard Chartered, MUFG, Sumitomo Mitsui Banking Corporation, Credit Agricole, Commerzbank, HSBC, Riyad Bank, Saudi British Bank, ANZ, EBRD, Japan Exim Bank, Banque Saudi Fransi, Afreximbank, AlAhli Bank, Export-Import Bank of India; the Value of top ten manufacturers accounts about 14% of the total Value in 2019.
The trade finance market is highly competitive, with major banks dominating the market. The leading trade finance banks are on the verge of transforming their industry from a paper-based system to a more efficient and transparent digitized model with faster and more reliable service.BNP Paribas is one of the founding members of Voltron, the open platform for documentary trade. The bank has also entered a partnership with Cashforce, a fintech, to offer digital cash flow forecasting and working capital services to corporate treasurers. Greenwich Associates has named BNP Paribas as a quality leader in trade finance in parts of Europe and Asia.
Through innovation and with a strong foundation in digitally-enabled strategies, Citi can enable access to highly tailored products and sources of funds while focusing on balance sheet efficiency targets. Strategies include offerings such as Electronic Trade Loans, Receivables and Distribution or Sales Finance, and a variety of enhanced data insight analytics to add value throughout the transaction life cycle.
Citigroup provided over 167 billion USD of annual trade finance in 2019.
ICBC trade finance services incorporate the entire trade flow that includes the complete product lines of import, export products, such as L/C, bills collection, and open-account sales, etc. There are tailor-made product combinations to fulfill different import/export trade finance needs, which facilitates customers' business development and trade risk monitoring.
HSBC’s solutions pull from our vast portfolio of trade and receivables finance products to release funds from the sales, inventory, and supply chain. With this consolidated view, one could be able to unlock and move spare working capital to reduce the cost of funding and minimize reliance on more expensive unstructured lending. We could even help make your business more attractive to investors by analyzing key metrics and increasing efficiency ratios.
Other major players in the market include Bank of China, China Exim Bank, JPMorgan Chase & Co, Mizuho Financial Group, Standard Chartered, MUFG, Sumitomo Mitsui Banking Corporation, Credit Agricole, Commerzbank, HSBC, Riyad Bank, Saudi British Bank, ANZ, EBRD, Japan Exim Bank, Banque Saudi Fransi, Afreximbank, AlAhli Bank, Export-Import Bank of India, etc.
In the trade finance market, LAMEA and North America jointly accounted for higher revenues. In terms of revenue, the LAMEA region dominated the trade finance sector in 2018 and is expected to retain its dominance during the forecast period, due to higher oil production and large-scale exports, and agency finance services. Moreover, the U.S. export and agency funding strengthens export opportunities by engaging in large-scale project planning activities and developing sustainable infrastructure that contributes to regional economic development.
In 2019, APAC had the largest trade finance market share, and the region is expected to offer market vendors several growth opportunities over the forecast period. Growing government funding to improve trade finance for increased exports would have a major effect on the growth of the trade finance market share in this region. China is among APAC's main trade finance markets. In this region, demand growth would be higher than business growth in other regions. Saudi Arabia's trade finance accounts for about 24% of merchandise trade flow
Europe is projected to rise at the fastest pace in the forecast period due to the involvement of export credit agencies (ECA) conducting foreign trade, strengthening government policy, and facilitating trade across the globe.
The trade finance report includes a country-wise and region-wise market size for the period 2015-2026. It also includes market size and forecast by Type, and by Application segment in terms of revenue for the period 2015-2026.
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Report Metric |
Details |
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Report Name |
Trade Finance Market |
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Market size value in 2020 |
$7616520 Million |
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Revenue forecast in 2027 |
$10987510 Million |
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Growth Rate |
CAGR of 5.4% from 2021 to 2027 |
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Base year considered |
2020 |
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Forecast period |
2021-2027 |
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Forecast units |
Value (USD) |
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Segments covered |
Type, End-User, Offerings, and Region |
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Market BY Type |
Letters of Credit, Guarantees, Supply Chain Finance, Factoring, Documentary Collection, Other |
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Market BY Application/End-User |
Finance, Energy, Power Generation, Transport, Renewables, Metals & Non Metallic Minerals, Other |
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Report coverage |
Revenue & volume forecast, company share, competitive landscape, growth factors, and trends |
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Geographic regions covered |
North America, Europe, Asia Pacific, Latin America, Middle East & Africa |
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Companies covered |
BNP Paribas, Bank of China, Citigroup Inc, China Exim Bank, ICBC, JPMorgan Chase & Co, Mizuho Financial Group, Standard Chartered, MUFG, Sumitomo Mitsui Banking Corporation, Credit Agricole, Commerzbank, HSBC, Riyad Bank, Saudi British Bank, ANZ, EBRD, Japan Exim Bank, Banque Saudi Fransi, Afreximbank, AlAhli Bank, Export-Import Bank of India |
Ans. The global Trade Finance market size is projected to reach US$ 10987510 million by 2027, from US$ 7616520 million in 2020, at a CAGR of 5.4% during 2021-2027.
Ans. Based on market type, In 2019, the proportion of Letters of Credit is the largest, accounting for about 39%.
Ans. Some key players operating in the Trade Finance Market are BNP Paribas, Bank of China, Citigroup Inc, China Exim Bank, ICBC, JPMorgan Chase & Co, Mizuho Financial Group,Standard Chartered, MUFG, Sumitomo Mitsui Banking Corporation, Credit Agricole, Commerzbank, HSBC, Riyad Bank, Saudi British Bank, ANZ, EBRD, Japan Exim Bank, Banque Saudi Fransi, Afreximbank, AlAhli Bank, Export-Import Bank of India
Ans. The trade finance market space has evolved, with the technological enhancements, switches in corporate behaviour, regulatory reforms, and increasing market competition. The trade finance market size is further expected to be augmented by increasing worldwide import and export.
Ans. The forecast period for the trade finance market is 2021 to 2027.
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