The global trade finance market size is anticipated to expand at a CAGR of 5.37% and is projected to reach USD 11577.3 Billion during the forecast period, between 2021 and 2028. The trade finance service providers increased the number of solutions for their customers and the growing need for keeping themselves ahead of the other competitors in the international trade finance market.
Trade finance means financing for trade in both domestic and international trade transactions. It includes products and the financial instruments that are used by companies to facilitate trade and commerce-related transactions. The trade transactions are facilitated by various intermediaries such as banks and financial institutions. The major advantage of trade finance is that it helps in facilitating an easy way to arrange short-term finance. There are different types of trade finance available in the international market including letters of credit, export credit, working capital (cash credit and overdraft), insurance, and invoice discounting or factoring. However, trade finance offers firms the best possible opportunity to realize profits from investment in international trade.
Market Trends, Drivers, Restraints, and Opportunities:
- Rising need for marinating safety & security of trading activities and increasing uses of an electronic system such as QR codes, RFID readers, and optical character recognition are boosting the trade finance market.
- Increasing competition at the international level and the growing adoption of trade finance services by small and medium scale enterprises in developing countries are fueling the market.
- Growing implementation of the new trade agreement and favorable policies in international trade finance are driving the market.
- Growing trade wars between the nations and high implementation of costs are hampering the market.
- Increasing integration of advanced technologies such as machine learning, blockchain, the internet of things (IoT), and artificial intelligence in trade finance is creating opportunities in the market.
- The introduction of clearinghouses that are capable of analyzing the capabilities of buyers and sellers are likely to generate opportunities in the market.
Scope of the report:
The report on the global trade finance market includes an assessment of the market, size, share, trends, segments, and regional markets. Overview and dynamics have been included in the report.
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Attributes
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Details
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Report Title
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Trade Finance Market - Global Industry Analysis, Growth, Share, Size, Trends, and Forecast
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Base Year
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2020
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Historic Data
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2018 & 2019
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Forecast Period
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2021–2028
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Segmentation
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Products (Commercial Letters of Credit (LCs), Bill of Lading, Standby Letters of Credit (LCs), Guarantees, and Others), Types (Structured Trade Finance, Supply Chain Finance, and Traditional Trade Finance), Service Providers (Banks, Trade Finance Houses, and Others), Applications (Domestic and International), End-users (Traders, Importers, and Exporters)
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Regional Scope
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Asia Pacific, North America, Europe, Latin America, and Middle East & Africa
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Report Coverage
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Market scope, analysis, share, competitive analysis, growth facts, restraints, opportunities, and revenue forecast
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Key Players Covered
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Asian Development Bank, Banco Santander, S.A, Bank of America Corporation, BNP PARIBAS, Citigroup Inc, Credit Agricole CIB, EULER HERMES, EXIMBANK, HSBC Group, JPMorgan Chase & Co, Morgan Stanley, MUFG Bank, Ltd, Royal Bank of Scotland plc, Standard Chartered Bank, and Wells Fargo
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Trade Finance Market Segment Insights:
Letter of credit segment to grow during the anticipated period
In terms of products, the global trade finance market is segmented into commercial letters of credit (LCs), bill of lading, standby letters of credit (LCs), guarantees, and others. The letter of credit segment is expected to hold a significant market share during the forecast period, due to the increasing business operations and growing demand for customized trade finance solutions. Moreover, the rising number of small and medium businesses in emerging economies is creating opportunities for the segment to grow in the forecast period.
Supply chain finance segment to grow in the forecasted period
On the basis of types, the global trade finance market is segregated into structured trade finance, supply chain finance, and traditional trade finance. The supply chain finance segment is expected to hold a significant share of the market during the forecast period, due to the rising supply chain finance programs at the domestic and international levels. Supply chain finance helps in subsequently sourcing capital at lower costs from banks and other financial institutions. Moreover, supply chain finance allows buyers to negotiate with sellers in better terms related to the payment extension schedules.
Banks segment held substantial market share in 2020
Based on service providers, the trade finance market is segregated into banks, trade finance houses, and others. The banks' segment constituted a significant market share in 2020 and is projected to expand at a rapid rate during the forecast period. The growth in the bank's segment is attributed to the support provided by banks and their ability to mitigate risks. Moreover, the growing adoption of the transparent digitized model by banks to improve the trade finance process and eliminate the risk in trade finance by purchasing credit insurance. Additionally, banks provide intercompany trade credits to parties involved in trading activities such as sellers, purchases, and other trading parties.
International segment to grow during the anticipated period
In terms of applications, the global trade finance market is segmented into domestic and international. The international segment is expected to hold a significant market share during the forecast period, due to the growing urbanization and increasing trading activities in developing countries. Moreover, growing cross-border exporting and importing of goods and services require the need for trade finance to manage and structure the complex trade activities is anticipated to propel the segment during the forecast period.
Traders segment to grow in the forecasted period
On the basis of end-users, the global trade finance market is segregated into traders, importers, and exporters. The importers' segment constituted a significant market share in 2020, due to the rising irregularities in trading activities. The activities further result in the generation of unstructured data and required trade finance. The trader's segment is expected to hold a significant share of the market during the forecast period, due to the growing adoption of trading technologies and favourable regulatory compliance. Moreover, the rise in multiple communication channels and the need for managing the wealth account of an individual, which are anticipated to propel the segment during the forecast period.
Asia Pacific dominates the global market
Based on regions, the global trade finance market is split into North America, Europe, Asia Pacific, Latin America, and the Middle East & Africa. Asia Pacific constituted a significant share of the market in 2020, due to the rising number of new technologies that are used to simplify processes in trade finance. The market in the Asia Pacific is projected to expand at a significant CAGR during the forecast period, owing to the favourable government processes in countries like China, Japan, India, Singapore, and South Korea. Moreover, growing digitization and increasing investment by the government in the banking, financial services, and insurance sectors are projected to propel the market in Asia Pacific.
Segments
By Products
- Commercial Letters of Credit (LCs)
- Bill of Lading
- Standby Letters of Credit (LCs)
- Guarantees
- Others
By Types
- Structured Trade Finance
- Supply Chain Finance
- Traditional Trade Finance
By Service Providers
- Banks
- Trade Finance Houses
- Others
By Applications
By End-users
- Traders
- Importers
- Exporters
By Regions
- North America
- Europe
- Latin America
- Asia Pacific
- Middle East & Africa
By Key Players
- Morgan Stanley
- Asian Development Bank
- Banco Santander, S.A
- Bank of America Corporation
- BNP PARIBAS
- Citigroup Inc
- Credit Agricole CIB
- EULER HERMES
- EXIMBANK
- HSBC Group
- JPMorgan Chase & Co
- MUFG Bank, Ltd
- Royal Bank of Scotland plc
- Standard Chartered Bank
- Wells Fargo
Competitive Landscape
Key players in the global trade finance market include Asian Development Bank, Banco Santander, S.A, Bank of America Corporation, BNP PARIBAS, Citigroup Inc, Credit Agricole CIB, EULER HERMES, EXIMBANK, HSBC Group, JPMorgan Chase & Co, Morgan Stanley, MUFG Bank, Ltd, Royal Bank of Scotland plc, Standard Chartered Bank, and Wells Fargo. These players engage in mergers & acquisitions, collaborations, agreements, and partnerships to strengthen their geographical presence.
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