The global trade finance market was valued at around $39 billion in 2015 and is expected to reach almost $47 billion by 2020, says Technavio.
Technavio has announced its latest market research report on global trade finance market to its new research areas portfolio. This market analysis discusses the major drivers and key emerging trends that will influence the growth of the trade finance market during the forecast period 2016-2020. Some of the top vendors listed in this industry analysis include BNP Paribas, Citigroup, HSBC, JPMorgan Chase, and Mitsubishi UFJ Financial.
In terms of geographical analysis, EMEA will be the fastest growing region in the global market, reaching revenues of more than $18 billion by 2020. Germany, France, the UK, and Italy will emerge as the key revenue-generators in the region.
“There is a rising need for the adoption of strategies that help inaccurate valuation, risk management analytics, and different market standard models among FX traders and policymakers. Structuring and pricing tools help understand the risk profiles for transactions in different products such as structured notes and FX swaps. Several top multi-national banks in different geographical markets are offering custom-designed tools for stress testing and managing risks across different portfolios,” says Amit Sharma, a lead analyst at Technavio for research on new research areas.
Click here to request a free sample of this report
The new industry research report from Technavio analyzes some of the key drivers and trends responsible for the growth of this market and its sub-segments.
Need for alternative source of financing for MSMEs
MSMEs often face a disadvantage when dealing with capital market in terms of credit rationing and finance gaps. The gap refers to the difference in WC and the cash flow of companies. Such disparities have spurred the need for alternative sources of financing such as factoring in spite of service providers charging 10%-15% of the receivables as commission. MSMEs use such services in their start-up and growth stages. This trend stems from the difficulty faced my MSMEs in raising finances due to a lack of data about their performance histories during these phases. Receivable financing, bills discounting, and factoring act as a substitute for the prerequisites of WC financing, subsequently catering to the special needs of MSMEs.
Efficient liquidity management in factoring market
Basel III norms are designed specifically to boost liquidity and reduce leverage in banking systems. The introduction of these norms was followed by several subsequent changes in liquidity standards which could potentially affect the rate of return during the forecast period. As a result, businesses are now shifting their focus to the automated liquidity structure such as cash and notional pooling for efficient cash flow management. Organizations are devising technologically advanced solutions like multilateral and multicurrency netting to manage institutional liquidity to attract long-term investment options. Furthermore, corporates are also setting up sophisticated liquidity management structures that can help them reduce the WC gap and increase the scope of profitability.
Dynamic market structure
Changing demographics play a key role in reshaping the global trade finance market as it has a strong impact on a country’s import and export demand. Factors such as the average age of the overall population, migration trends, and improving educational levels influence the makeup of the labor force and production levels. At present, all major regions are experiencing changes that are the volume of trade flows.
The onset of globalization has made supply chains more complex than before. As a result, financial institutions are shifting their focus towards future supply chain solutions that can help mitigate the financial risks associated with different international transactions. Also, there is increasing emphasis on cost optimization as it helps increase transparency and facilitates the flow of transaction data between different counterparties. The implementation of the WTO Trade Facilitation Agreement is expected to boost international trade over the next four years.
Some of the other prominent vendors identified in this report are ANAZ, Arab Bank, Bank of America Merrill Lynch, BNP Paribas, BNY Mellon, Capital Group, Commerzbank Group, Credit Agricole Group, Deutsche Asset & Wealth Management, Deutsche Bank, Factor Funding, Goldman Sachs, Itaú Unibanco Group, Morgan Stanley, New Century Financial, Nordea Paragon Financial, Royal Bank of Scotland, Royal Bank of Scotland Group, Santander Group, Standard Chartered Bank, Sumitomo Mitsui Financial Group, SunTrust Bank, UBS AG, UniCredit, and Wells Fargo.
This research report includes an in-depth analysis and market shares and sizes of the sub-segments and geography. It provides a comprehensive analysis of the key companies, including their market shares, business overview, key financials, etc. The market study also offers a detailed analysis of key drivers, challenges, and opportunities influencing this market.
A more detailed analysis is available in the Technavio report titled, ‘Global Trade Finance Market 2016-2020‘. Technavio also customizes reports by other regions and specific segments upon request.
Other related reports:
- Global Algorithmic Trading Market 2016-2020
- Global Structured Finance Market 2016-2020
- Global Shadow Banking Market 2016-2020
To read more press releases- click here.
For any assistance or query, please contact our media team at:
US: +1 630 333 9501
UK: +44 208 123 1770
