Supply Chain Finance Market is Expected to Grow at a CAGR of 13.0% Over the Forecast Period (2024-2031) | Citibank, J.P. Morgan Chase, HSBC, Standard Chartered

𝐓𝐡𝐞 𝐆𝐥𝐨𝐛𝐚𝐥 𝐒𝐮𝐩𝐩𝐥𝐲 𝐂𝐡𝐚𝐢𝐧 𝐅𝐢𝐧𝐚𝐧𝐜𝐞 𝐌𝐚𝐫𝐤𝐞𝐭 𝐫𝐞𝐚𝐜𝐡𝐞𝐝 𝐔𝐒𝐃 𝟏.𝟓 𝐛𝐢𝐥𝐥𝐢𝐨𝐧 𝐢𝐧 𝟐𝟎𝟐𝟐 𝐚𝐧𝐝 𝐢𝐬 𝐞𝐱𝐩𝐞𝐜𝐭𝐞𝐝 𝐭𝐨 𝐫𝐞𝐚𝐜𝐡 𝐔𝐒𝐃 𝟒.𝟎 𝐛𝐢𝐥𝐥𝐢𝐨𝐧 𝐛𝐲 𝟐𝟎𝟑𝟏, 𝐠𝐫𝐨𝐰𝐢𝐧𝐠 𝐰𝐢𝐭𝐡 𝐚 𝐂𝐀𝐆𝐑 𝐨𝐟 𝟏𝟑.𝟎% 𝐝𝐮𝐫𝐢𝐧𝐠 𝐭𝐡𝐞 𝐟𝐨𝐫𝐞𝐜𝐚𝐬𝐭 𝐩𝐞𝐫𝐢𝐨𝐝 𝟐𝟎𝟐𝟒-𝟐𝟎𝟑𝟏.

Supply chain finance (SCF) refers to a collection of technology-driven solutions designed to reduce financing expenses and enhance operational efficiency for buyers and sellers involved in a sales transaction. SCF methodologies function by automating transactions and monitoring the processes of invoice approval and settlement, from commencement to conclusion.

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The supply chain finance market is expanding with advanced and innovative solutions, effecting significant shifts that change corporate operations within supply chains. The future will see an increase in technology-driven supply chain finance solutions, allowing companies to obtain flexible financing alternatives and optimize payment procedures throughout fragmented supply chains.

The combination of rapid expansion, evolving regulations, and new reporting obligations for SCF renders it unsurprising that sector participants prefer collaboration. A burgeoning trend of collaboration is emerging within the business, especially between banks and fintech companies. This connection has not consistently been harmonious, since competition rather than collaboration characterized its inception.

Market Drivers:

The Increasing Digitalization of Commerce and Trade Finance

In recent years, digital technologies like blockchain have garnered attention for their capacity to revolutionize global trade. Nonetheless, the trade finance sector first encountered difficulties in embracing completely new innovations, opting instead to digitize pre-existing paperwork. This hesitance was exacerbated by the existing legal system, wherein certain documents essential to international trade, such as bills of lading and bills of exchange, remained regulated by the notion of physical ownership. As a result, digital trade documents lacked legal recognition, hindering their extensive adoption.

The recent enactment of the UK's Electronic Trade Document Bill, which received royal assent in July 2023, signifies a crucial advancement in addressing these difficulties. This legislation, grounded in the UN's Model Law on Electronic Transferable Records (MLETR), grants electronic trade documents equivalent legal status to paper-based paperwork in the realms of international trade and trade finance.

McKinsey forecasts that the use of electronic bills of lading may save direct expenses by US$6.5 billion and facilitate an additional US$40 billion in global trade. The recent legal acknowledgment of digital trade documents is expected to yield substantial efficiencies in global supply chains, decreasing operational expenses and improving transaction velocity.

The global ramifications of this legislative alteration transcend the UK, given that the majority of trade agreements, encompassing 80% of bills of lading, are regulated by UK law. This extensive impact is anticipated to result in a significant rise in the volume of commerce financed by both banking and non-banking financial institutions.

Supply Chain Finance Market is segmented by Provider, Offering, Application, End-User and by region.

Based on Provider segment the market is classified further as Banks, Trade Finance Houses, Others.

Based on offering segment the market is sub categorised as Letter of Credit, Export and Import Bills, Performance Bonds, Shipping Guarantees, Others.

Based on application segment the market is divided into Domestic, International

On the basis of End-User the market is sub categorized into Large Enterprises, Small and Medium-sized Enterprises. whereas the Small and medium-sized enterprises (SMEs) represent the largest segment in the supply chain finance (SCF) industry, driven by their necessity to enhance working capital, alleviate financial risks, and facilitate business expansion. Small and medium enterprises sometimes encounter substantial liquidity challenges stemming from protracted payment delays by larger creditors, with the average debtor days for Indian SMEs totaling 66.5 days. Prolonged delays necessitate that SMEs pursue alternative financing, frequently turning to expensive lending from informal lenders, thereby worsening working capital deficits, elevating borrowing expenses, and hindering profitability.

Regional Overview:

The North American supply chain financing sector is undergoing substantial expansion, propelled by technical innovations and strategic investments from prominent financial institutions. A significant advancement in the region is the worldwide use of supplier enablement portals and platforms aimed at optimizing client onboarding procedures. These portals generally examine expenditure data and offer comprehensive insight into the supplier onboarding procedure, enhancing convenience and efficiency within the SCF ecosystem. The capacity to streamline onboarding and guarantee transparency is facilitating the proliferation of SCF solutions across diverse sectors.

The Asia-Pacific region possesses the largest portion of the worldwide supply chain financing (SCF) industry, distinguished by varied economic development among nations. China dominates the regional market, exhibiting strong growth, although emerging economies like Uzbekistan, Kazakhstan, and Kyrgyzstan are experiencing the early development of supply chain financing ecosystems, propelled by government backing, industry associations, and essential infrastructure. The establishment of comprehensive standards and regulations throughout the region has markedly improved industrial performance, operational efficiency, and business results.

Market Players Overview:

As supply chain finance (SCF) continues to evolve, emerging players and startups are leveraging innovative financial solutions to enhance liquidity, streamline operations, and strengthen supplier relationships. These businesses, often facing financial constraints, are turning to SCF strategies such as invoice financing, dynamic discounting, and reverse factoring to optimize cash flow and unlock working capital. By embracing technology-driven solutions, improving creditworthiness assessments, and fostering collaborative ecosystems with suppliers, startups are not only overcoming financial challenges but also positioning themselves for long-term growth and resilience in an increasingly competitive market.

Leading Players in the market are:

Citibank, J.P. Morgan Chase, HSBC, Standard Chartered, Wells Fargo, Banco Santander, BNP Paribas, Deutsche Bank oracle and Taulia.

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Frequently asked questions:

➠ What is the global sales value, production value, consumption value, import and export of Supply Chain Finance Market?

➠ Who are the global key manufacturers of the Supply Chain Finance Industry? How is their operating situation (capacity, production, sales, price, cost, gross, and revenue)?

➠ What are the Supply Chain Finance Market opportunities and threats faced by the vendors in the Global Supply Chain Finance Industry?

➠ Which application/end-user or product type may seek incremental growth prospects? What is the market share of each type and application?

➠ What focused approach and constraints are holding the Supply Chain Finance Market?

➠ What are the different sales, marketing, and distribution channels in the global industry?

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