How Trade Finance Will Make Your Business Profitable?

Surge in technological developments, increase in competition, and new trade agreements drive the global trade finance market. However, rise in trade wars and lack of focus on small- & medium-sized enterprises hinder the market growth. On the other hand, advancements in the field of global trade finances create new opportunities in the market.

According to the report, the global trade finance market was valued at $39.71 billion in 2018, and is estimated to grow $56.06 billion by 2026, witnessing a CAGR of 3.79% from 2019 to 2026.

The export and agency finance segment to maintain its highest share by 2026-

Based on product type, the export and agency finance segment held nearly four-fifths of the total share of the global trade finance market in 2018, and is expected to maintain its highest share throughout the forecast period. This is due to its highly structured financing solutions, improvement in exporters risk capacity, and ability of domestic companies to export goods and services across the world. On the other hand, the supply chain finance segment is expected to grow at the highest CAGR of 3.81% from 2019 to 2026, owing to the product permits that enable businesses to widen payment timelines for large corporations and small & medium sized enterprises.

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The importers segment to contribute its dominant position during the forecast period-

Based on end user, the importers segment contributed to the highest market share in the global trade finance market, accounting for more than two-fifths of the total market share in 2018, and is estimated to retain its dominant position during the forecast period. This is due to challenges overcame by them through maintenance of working capital despite delays and complications during trading goods overseas. However, the traders' segment is expected to grow the largest CAGR of 3.92% from 2019 to 2026. This is due to traders being largely dealing under short term periods, holding assets to capitalize on short-term trends in the market.

LAMEA to maintain its dominant share by 2026, North America to follow-

Based on region, LAMEA accounted for the largest market share, contributing to more than two-fifths of the global trade finance market in 2018, and is estimated to maintain its dominant share throughout the forecast period. This is due to high oil production, large-scale exports, and better services from agency finances. North America is expected to hold the second-highest market share during the forecast period. However, Europe is expected to grow at the highest CAGR of 3.95% from 2019 to 2026. This is attributed to the involvement of export credit agencies (ECA) that carry out international trade, improve public policy from government agencies, and promote trade across the globe.

Leading market players

Asian Development Bank (ADB)
Bank of America
BNP Paribas
Citigroup Inc.
Euler Hermes
HSBC Holdings plc
JPMorgan Chase & Co
Mitsubishi UFJ Financial Group, Inc.
Royal Bank of Scotland
Standard Chartered Bank