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The trade finance market size is estimated to increase by USD 16.64 billion, growing at a CAGR of 5.38% between 2023 and 2028. The growth of the market depends on several factors such as the growing number of exports, enhanced cash flows leading to business growth, and the emergence of clearing houses. The market's significant growth is largely propelled by a surge in export volumes. This increase is driven by factors like accelerated globalization and the lowering of trade barriers facilitated by the World Trade Organization (WTO), which greatly enhances market expansion. Moreover, market participants play a crucial role in aiding domestic businesses by offering them immediate value for their products upon departure from domestic customs.
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The traditional trade finance segment is estimated to witness significant growth during the forecast period. Traditional business finance provides a broad spectrum of risk management tools and trade payment through products including commercial letters of credit, documentary collections, open account processing, purchase order management, and document preparation. One of the main market players which offers such a solution is JPMorgan Chase & Co. (JPMorgan).
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The traditional trade finance segment was the largest segment and was valued at USD 18.34 billion in 2018. Thus, market players like JP Morgan &Chase offer traditional business finance solutions through web-based trade transaction management platforms, which enable clients to manage their trade activities, from purchase orders to payments. The main advantage of this solution is that it enables sellers and buyers to connect with market players and offer them access anytime/anywhere, creates visibility, accelerates the payment cycle, and minimizes costs while optimizing the trade payment process. Furthermore, HSBC is another market player which provides traditional business finance tools to clients, including corporations, government bodies, and institutions across the world. Hence, such factors are expected to fuel the growth of this segment which in turn will drive the market growth during the forecast period.
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APAC is estimated to contribute 37% to the growth of the global market during the forecast period. Technavio’s analysts have elaborately explained the regional trends and drivers that shape the market during the forecast period. Another region offering significant growth opportunities to vendors is North America. One of the main factors which are significantly contributing to the growth of the global market in North America is the presence of top global exporters including the US and Canada.
Moreover, one of the leading exporters of capital goods including commercial aircraft, machines, and semiconductors, to Africa and Asia is the US. As a result, several market players in the region are forming strategic partnerships and alliances in order to increase their market reach and expand their customer base, and support trade in emerging markets. For instance, In July 2020, Citigroup extended its partnership with International Finance Corp., which facilitated financing for 4,600 trade transactions through 185 banks in 48 emerging market countries. Such partnerships allow the expansion of the availability across the globe. Thus, factors such as the increased benefits of these services and the growing incorporation of technology is expected to drive the market growth in the region during the forecast period.
The market is experiencing a dynamic transformation fueled by the convergence of international trade and advanced financial solutions. With global trade operations spanning diverse time zones, traditional paper-based processes are gradually giving way to innovative digital platforms. This shift is driven by the need for efficient trade finance solutions that streamline application processes, reduce paperwork, and mitigate risks associated with trade agreements and geopolitical tensions such as trade wars. Blockchain technology is revolutionizing trade finance by offering secure and transparent trade settlements, while sustainable finance initiatives are gaining traction. Digitalization and the adoption of advanced technologies like automation and AI are reshaping trade finance processes, leading to the emergence of digital trade finance ecosystems. Banks and financial institutions are embracing blockchain-based solutions to enhance the efficiency and security of trade transactions in today's technologically evolving landscape. Our researchers analyzed the data with 2022 as the base year, along with the key drivers, trends, and challenges. A holistic analysis of drivers will help companies refine their marketing strategies to gain a competitive advantage.
One of the primary drivers catalyzing the growth of the market is the burgeoning volume of exports. This uptrend is fueled by factors such as the rapid globalization and the reduction of trade barriers facilitated by the World Trade Organization (WTO), significantly bolstering market expansion. Additionally, market players play a pivotal role in supporting domestic enterprises by providing them with value for their products immediately upon shipment departure from domestic customs.
Furthermore, these market entities offer working capital that would otherwise remain dormant until product delivery, aiming to maintain a positive cash-flow cycle during transit. This practice fosters trust between sellers and buyers, facilitating seamless trade processes. With the aid of innovative technologies like blockchain-based solutions and automation, digital finance ecosystems are evolving to streamline trade transactions and enhance efficiency across supply chains. Consequently, these factors are poised to drive sustained market growth throughout the forecast period.
A key factor shaping the global market growth is the adoption of structuring and pricing tools. Several market players in the global market provide risk and scenario analytics for hedging, real-time pricing, and capital management of multi-asset portfolios. Such risk and scenario analytics are tools and solutions for clients and investors who are planning to invest in particular markets and instruments.
Moreover, several financial professionals who deal with financial products utilize credit data and information to offer cash flow and analytics at a portfolio level. Thus, such kinds of practical processes enable the management of individual portfolios and prevent firm-wide risks through consistency, automation, and transparency through algorithmic trading. Hence, such factors are expected to drive market growth during the forecast period.
Lack of access to trade financing among SMEs is one of the key challenges hindering global market growth. There is a major challenge among small and medium-sized enterprises (SMEs) in accessing financing on affordable terms. There are financial issues for SMEs in both developed and developing economies but is significantly challenging in low-income countries.
Moreover, it is essentially due to the lack of interest among global market players to do business in these low-income countries due to the fear of financial instability. These SMEs have fewer guarantees, collateral, and credit history as compared with larger companies which makes it difficult for them to obtain finances. Hence, such factors are negatively impacting the market which in turn will hinder the market growth during the forecast period.
The market research report includes the adoption lifecycle of the market, covering from the innovator’s stage to the laggard’s stage. It focuses on adoption rates in different regions based on penetration. Furthermore, the report also includes key purchase criteria and drivers of price sensitivity to help companies evaluate and develop their growth strategies.
Market Customer Landscape
Companies are implementing various strategies, such as strategic alliances, partnerships, mergers and acquisitions, geographical expansion, and product/service launches, to enhance their presence in the market.
Australia and New Zealand Banking Group Ltd: The company offers trade finance such as ANZs trade and supply chain.
The research report also includes detailed analyses of the competitive landscape of the market and information about 20 market companies, including:
Qualitative and quantitative analysis of companies has been conducted to help clients understand the wider business environment as well as the strengths and weaknesses of key market players. Data is qualitatively analyzed to categorize companies as pure play, category-focused, industry-focused, and diversified; it is quantitatively analyzed to categorize companies as dominant, leading, strong, tentative, and weak.
The market research report provides comprehensive data (region wise segment analysis), with forecasts and estimates in "USD Billion" for the period 2024 to 2028, as well as historical data from 2018 to 2022 for the following segments.
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The market is undergoing a significant transformation driven by advancements in technology and the adoption of innovative solutions. Traditional paper-based processes are being replaced by digital solutions, leveraging artificial intelligence and blockchain technology to streamline transaction processes and reduce inefficiencies. Financial institutions and fintech firms are collaborating to offer sustainable trade finance instruments and promote responsible sourcing practices. Initiatives aimed at digitization and modernization of financial infrastructure are enhancing liquidity and reducing processing times. With a focus on eco-friendly supply chains and ESG-linked loans, trade finance is aligning with climate and social issues. Despite challenges such as delays and disputes, the market is poised for growth fueled by technological innovations and sustainable trade practices.
Moreover, the market is experiencing a transformative shift driven by Advanced Technology and the widespread adoption of Digitalization. Banking Institutions and businesses are leveraging Artificial Intelligence (AI) Technology and blockchain-based solutions to streamline processes and enhance efficiency in Cross-Border Transactions. Digital platforms and E-Commerce Platforms are revolutionizing the trade finance landscape, facilitating seamless digital documentation and digital trade finance ecosystems. Furthermore, Data Analytics is empowering financial institutions with valuable insights for risk management and fraud detection. Amidst global regulations and climate & social issues, Export Financing and financial solutions are crucial for economic expansion. With expertise in Credit insurance and Hedging options, the market is poised for growth, supported by robust infrastructure development and access to financial resources.
Market Scope |
|
Report Coverage |
Details |
Page number |
180 |
Base year |
2023 |
Historic period |
2018-2022 |
Forecast period |
2024-2028 |
Growth momentum & CAGR |
Accelerate at a CAGR of 5.38% |
Market growth 2024-2028 |
USD 16.64 billion |
Market structure |
Fragmented |
YoY growth 2023-2024(%) |
4.81 |
Regional analysis |
North America, Europe, APAC, Middle East and Africa, and South America |
Performing market contribution |
APAC at 37% |
Key countries |
US, China, Japan, UK, and South Korea |
Competitive landscape |
Leading Companies, Market Positioning of Companies, Competitive Strategies, and Industry Risks |
Key companies profiled |
Australia and New Zealand Banking Group Ltd., Banco Santander SA, Bank of America Corp., Barclays PLC, BNP Paribas SA, Citigroup Inc., Credit Agricole SA, Deutsche Bank AG, HSBC Holdings Plc, JPMorgan Chase and Co., Mitsubishi UFJ Financial Group Inc., Morgan Stanley, NatWest Group plc, Standard Chartered PLC, Societe Generale SA, The Bank of New York Mellon Corp., The Goldman Sachs Group Inc., UBS Group AG, UniCredit SpA, and Wells Fargo and Co. |
Market dynamics |
Parent market analysis, Market forecasting, market report, market forecast, Market growth inducers and obstacles, Fast-growing and slow-growing segment analysis, Market growth and Forecasting, COVID 19 impact and recovery analysis and future consumer dynamics, Market condition analysis for forecast period |
Customization purview |
If our report has not included the data that you are looking for, you can reach out to our analysts and get segments customized. |
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1 Executive Summary
2 Market Landscape
3 Market Sizing
4 Historic Market Size
5 Five Forces Analysis
6 Market Segmentation by Type
7 Market Segmentation by End-user
8 Customer Landscape
9 Geographic Landscape
10 Drivers, Challenges, and Opportunity/Restraints
11 Competitive Landscape
12 Competitive Analysis
13 Appendix
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