Global Trade Finance Market Research Report 2023

Trade Finance Market Outlook 2029

The global Trade Finance market was valued at US$ 8483660 million in 2022 and is anticipated to reach US$ 11631260 million by 2029, witnessing a CAGR of 5.4% during the forecast period 2023-2029. 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.

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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.

Trade Finance Market Share Analysis
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.

Top Major Players in the Trade Finance Market
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.

Below is a look into some of the top companies in the trade finance report:
BNP Paribas
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.

Citigroup inc
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.

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SIMILAR REPORT

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