Trade Finance Market Entry Strategies for New Players, Share, Size, Trends 2023

Trade Finance Market Set for Steady Growth: Expected CAGR of 5% During 2022-2028

The global trade finance market is experiencing robust growth, driven by rapid globalization and thriving import-export activities. The market is further propelled by the increasing adoption of advanced technologies such as blockchain, cryptocurrency, artificial intelligence (AI), and the Internet of Things (IoT).

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According to a recent study conducted by strategic consulting and market research firm Report Ocean, the trade finance market is forecasted to grow at a compound annual growth rate (CAGR) of 5% during the period from 2022 to 2028. With the expanding reach of globalization and the rising demand for financial tools to support and mitigate risks associated with international transactions, the global trade finance market has witnessed substantial growth. Additionally, the growing utilization of advanced technologies like blockchain, AI, IoT, and machine learning among small and medium-sized enterprises has also contributed to the market's expansion. However, challenges such as limited access to trade finance services and a significant supply-demand gap may act as restraining factors for the global trade finance market.

Increasing Small and Medium-Sized Enterprises Fueling Global Trade Finance Growth

Trade finance products have gained immense popularity among small and medium-sized enterprises (SMEs). These products enable SMEs to engage in international activities, participate in global value chains (GVCs), and foster innovation. Efforts by banks and other service providers to bridge the gap between trade finance demand and approvals for SMEs are expected to drive market growth during the forecast period.

Rising Demand for Letter of Credit Drives the Global Trade Finance Market

The global trade finance market is segmented into various offerings, including the letter of credit, bill of lading, export factoring, insurance, and others. Among these segments, the letter of credit holds the largest market share as it is considered the safest instrument for international traders. It provides sellers with protection against buyer bankruptcy since the creditworthiness is transferred to the issuing bank. Consequently, payment to the seller or lender becomes the obligation of the bank, ensuring security.

Trade Finance Market by Service Provider

Based on service providers, the trade finance market is segmented into banks and trade finance houses. Banks dominate the market due to their higher goodwill and security compared to other financial institutions. Businesses place greater trust in banks, as they provide higher guarantees for payment on exported goods. Additionally, banks offer increased security against currency fluctuations, which significantly contributes to market growth. However, trade finance houses are projected to witness impressive growth during the forecast period, driven by their increasing presence worldwide.

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Trade Finance Market - Regional Insights

Geographically, the global trade finance market is segmented into North America, Europe, Asia-Pacific, Latin America, and the Middle East & Africa. North America currently dominates the global trade finance market. However, the Asia-Pacific region is expected to exhibit the highest growth rate during the forecast period. Developments in trade between the United States and China have had a substantial impact on trade finance growth in South Asian nations. The region's expanding manufacturing sector and focus on streamlined production are key factors driving market growth.

Impact of COVID-19 on the Global Trade Finance Market

The COVID-19 pandemic had a negative impact on the trade finance market. Countries' engagement in bilateral trade was directly affected, creating obstacles for market growth. The sharp decline in global production and supply chains also directly influenced the demand for trade finance products, as the need for security against imports and exports decreased.

BY FINANCE TYPE (STRUCTURED TRADE FINANCE, SUPPLY CHAIN FINANCE, TRADITIONAL TRADE FINANCE), BY OFFERING (LETTERS OF CREDIT, BILL OF LADING, EXPORT FACTORING, INSURANCE, OTHERS), BY SERVICE PROVIDER (BANKS, TRADE FINANCE HOUSES), BY END-USER (SMALL AND MEDIUM ENTERPRISES, LARGE ENTERPRISES), BY REGION (NORTH AMERICA, EUROPE, ASIA-PACIFIC (APAC), LATIN AMERICA (LATAM), MIDDLE-EAST & AFRICA (MEA)
Competitive Landscape

Leading players in the global trade finance market include Asian Development Bank, Wells Fargo & Co., Banco Santander SA, Standard Chartered Bank, Bank of America Corp., Royal Bank of Scotland, BNP Paribas SA, Morgan Stanley, Citigroup Inc., Mitsubishi UFJ Financial Group Inc., Credit Agricole Group

Table of Content:
1. Research Framework
1.1. Research Objective
1.2. Product Overview
1.3. Key Market Segments
2. Research Methodology
2.1. Qualitative Research
2.2. Methodology
2.3. Regional Split of Primary & Secondary Research
2.4. Secondary Research
2.5. Primary Research
2.5.1. Breakdown of Primary Research Respondents, By Region
2.5.2. Breakdown of Primary Research Respondents, By Industry Participants
2.6. Market Size Estimation
2.7. Assumptions for the Study
2.8. Market Breakdown & Data Triangulation
3. Executive Summary

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This release was published on openPR.