Trade Finance Market Size, Share,Industry, Forecast and outlook (2024-2031)

The global trade finance market is expected to be driven by the rise of subsidies, export controls and investment restrictions, while contributing to trade fragmentation, which has inadvertently spurred the demand for sophisticated financial solutions. The increasing number of trade restrictive measures, particularly since the onset of the pandemic, highlights the need for innovative financial instruments to mitigate the impacts of protectionism.Furthermore, the anticipated growth in demand for services, notably in travel and transport sectors, is poised to drive an increased need for trade finance solutions. The projected growth in tourism in 2023, attributed to factors such as the easing of China's zero-COVID policy and a robust U.S. dollar, accentuates the significance of trade finance in ensuring smooth cross-border transactions in the service industry.Asia-Pacific dominates the trade finance market and is expected to grow with a good CAGR in the forecast period. The People's Republic of China (PRC), as the world's second-largest economy and a key player in international trade, significantly contributes to this market's growth and expansion.

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Market Dynamics

The global finance trade market is expected to be driven by growing Small and Medium-sized Enterprises (SMEs) globally. Trade finance, which involves financial instruments and means of payment for international transactions, can greatly enhance SMEs' ability to engage in international trade and participate in global value chains. Payments are made within two business days after invoicing, allowing SMEs to maintain better cash flow.According to a report by Investopedia, SMEs account for approximately 95% of the world's economy. The International Finance Corporation (IFC) estimates that around 40% of formal micro, small and medium enterprises (MSMEs) in developing countries have an unmet financing need of US$5.2 trillion annually. The financing gap represents significant untapped potential for SME growth which subsequently increases the growth for trade finance market.

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Segment Analysis

The global trade finance market is segmented based on product, finance, service provider, end-user and region.Letters of Credit are the Most Preferred Trade Finance ProductLetters of Credit hold the largest market share in the product type segment with their ability to provide security and assurance in complex international trade transactions. Acting as a guarantee that payment will be received on time and in the correct amount, LCs are emerges as most valuable technology in higher-risk scenarios, new trade relationships and situations where an importer's credit is uncertain.Indian startup KredX, which specializes in invoice discounting, has launched its International Trade Financing Services (ITFS) platform. The new platform, operated by its subsidiary KredX Ventures IFSC, will facilitate invoice discounting for both Indian exporters and importers.

Competitive Landscape

The major global players in the market include Oracle, Finastra, Surecomp, China Systems, Intellect Design Arena, iGTB (Intellect Global Transaction Banking), MITech, Innover Systems, CGI Trade360 and Cognizant.

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