After experiencing moderate growth from 2015-2020, the global trade finance market is projected to grow by 3.7% from 2021-2026, according to IMARC's latest report, Trade Finance Market Size: Global Industry Trends, Share, Growth, Opportunity and Forecast 2021-2026. This prediction may change as the pandemic continues to be tracked and evaluated as a major market contributor, IMARC says.
Trade finance refers to the financial products used by organizations to manage international trade and commerce. Trade finance introduces a third party to the transaction to streamline cash flow and provide protection against the potential risks of international trade and is primarily used by banks, trade finance companies, export credit agencies, importers and exporters, IMARC says.
Some trends within the global market for trade finance have been driven by rapid urbanization and steady growth in global trade, according to IMARC. IMARC links these trends to the integration of advanced technologies, such as blockchain, artificial intelligence, machine learning and the Internet of Things (IoT) in trade finance. IMARC's prediction for the global trade finance market share by finance type from 2021-2026 shows:
- 60% will be structured trade finance—a type of debt finance used as an alternative to conventional lending.
- 30% will be supply-chain finance—a transaction where a third party facilitates the exchange by financing the supplier on the customer's behalf.
- 10% will be traditional trade finance—a transaction where a bank facilitates the exchange of payments for materials.