Trade Finance Market Growth at USD 87.81 Billion by 2031 | SkyQuest Technology

The global Trade Finance Market, valued at USD 49.24 billion in 2023, is projected to grow to USD 87.81 billion by 2031, expanding at a CAGR of 7.50%. Key drivers include instruments like Letters of Credit, Supply Chain Financing, and Documentary Collections, across industries such as BFSI, manufacturing, and construction.
Global [https://www.skyquestt.com/report/trade-finance-market] was valued at USD 49.24 Billion in 2023 to USD 87.81 Billion by 2031, at a CAGR of 7.50% during the forecast period (2024-2031). The trade finance market growth is substantially facilitated by globalization and the prevalence of international trade. Given that corporations now operate globally, the demand for financial solutions that would help buyers and suppliers from around the world interact with one another has been rising. Trade finance provides such solutions and helps facilitate international trade to make it run as smoothly as it is possible. Furthermore, the rapid development of technologies had an impact on the development of trade finance, as well. Digital platforms and the development of the fintech have had an immense impact on how accessible trade financing is. It simplified the process of application and decision-making, as well as reduced the volume of required paperwork, thereby making trade finance more appealing and efficient.

Furthermore, it should be noted that in the context of a modern global economy with its increasing number of risks associated with doing business, such as credit, currency, and geopolitical risks, trade finance offers many risk mitigation solutions such as credit insurance and hedging options. At the same time, shifts in trade patterns can also be seen as a factor that drives the dynamics of the market. Reducing the demand for or increasing the supply of services for financing trade, such changes in trade patterns are rather a result of a wide range of factors, such as a developing infrastructure along the trade route, emerging political relationships, changed supply or demand trends and others.

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Rise of Globalization and International Trade to Increase Demand for Safe Trade Finance Solutions to Boost Market Growth

The market is expected to grow due to more rapid globalization and increasing international trade volume. As businesses are entering global markets, they need safe finance trade solutions to invest in to carry out cross-border transactions. The need is also increased because e-commerce is on the rise and is on-demand because of convenience. All types of businesses can work with e-commerce to carry out international trade, and to do so risk from international trade is reducing with more options for trade credit insurance and letters of credit. In general, as world economies get more interconnected, the need for trade finance services is increasing, as businesses seek new markets. The global trade finance market revenue will increase on a moderate-to-high scale, because the demand for the right financial service to ease the process of international exchange relations grows.

Growing Demand for Blockchain to Reduce Fraud in Finance to Boost Market Growth Next 4-5 Years

The increasing focus on the utilization of digital solutions in trade finance is improving the way companies operate. These solutions comprise blockchain, which helps reduce fraud and errors by offering outstanding transparency and security to supply chain finance and trade settlements. Moreover, as data analytics and artificial intelligence are improving the assessment of risks, it allows making more accurate lending decisions, so the financial gap is decreasing for businesses, especially small and medium-sized firms. The latter is also fueled by the rising appearing of fintech entrepreneurs, who are developing new digital platforms to simplify trade finance.

Latest Headlines to Follow in Trade Finance Market

In April 2022, Asian Development Bank and Axis Bank Limited has signed a deal funding up to $150 million to work with Axis Bank Limited to expand on supply chain finance for SMEs. The Asian Development Bank will guarantee loans given by Axis Bank under the conditions of its Trade and Supply Chain Finance Programme. The purpose of the loan is to help with supply chain finance for impact sectors.

In December 2022, Mitsubishi Ufj Financial Group Inc. has executed the sustainable trade finance facility for Tata Power. Financiers provided USD 54.3 million to Tata Power for the procurement of two solar power projects of TP Kirnali Limited. No prior sustainable trade finance facility has been executed in India thus far. TPKL will use the funds to build its renewable energy capacity.

In September 2023, Standard Chartered Bank's offering a sustainable trade loan for financial institutions expands on the company's sustainable finance proposition. The loan will be used to provide liquidity to financial institutions to support the underlying trade flows in the area where it is most needed.

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Trade Finance Market Segmental Analysis

Instrument Type

Letter of Credit

Supply Chain Financing

Documentary Collections

Receivables Financing/Invoice Discounting

Service Provider

Banks

Financial Institutions

Trading Houses

Others

Trade Type

Domestic

International

Enterprise Size

Large Enterprises

SMEs

Industry

BFSI

Construction

Wholesale/Retail

Manufacturing

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Trade Finance Industry Top Player's Company Profiles

Citigroup Inc. (US)

BNP Paribas SA (France)

HSBC Holdings plc (UK)

Mitsubishi UFJ Financial Group, Inc. (Japan)

JPMorgan Chase & Co. (US)

UniCredit S.p.A. (Italy)

Credit Agricole Group (France)

Santander Group (Spain)

Bank of America Corporation (US)

Standard Chartered Bank (UK)

Commerzbank AG (Germany)

Sumitomo Mitsui Financial Group, Inc. (Japan)

Deutsche Bank AG (Germany)

Barclays plc (UK)

Wells Fargo & Company (US)

Societe Generale (France)

China Development Bank Corporation (China)

China Exim Bank (China)

Export-Import Bank of Korea (South Korea)

Export-Import Bank of India (India)

Increasing Adoption of Supply Chain Financing Tools to Reduce Business Risks to Fuel Market Growth Next 10 Years

Current supply chains that include suppliers, logistics companies, and middlemen are frequently spread all throughout the world. This can give rise to a lot of risks, including natural calamities or geopolitical problems. Given the prevalent instability and threats, businesses are seeking to avoid disruptions by using supply chain finance tools to minimize risks and ensure continued commodity flow. Consequently, businesses can enhance their working capital, access short-term finance, and bolster relations with the suppliers. Furthermore, during difficult times, trade credit insurance ensures that the business is adequately protected against risks of non-payment. Businesses worldwide are constantly taking measures to minimize supply chain risks, leading to the growth of the trade finance market.

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