Trade Finance Market Trends

Growth Drivers

• Emerging trend for sustainable finance - The escalating demand for sustainable finance in the trade finance sector is raising the prospect of social, environmental, and governance principles. The sustainability of trade finance decisions is highly integrated into businesses and financial institutions.
  
  Green bonds and ESG-linked loans are amongst the most frequently used sustainability trade finance instruments. Due to the growing awareness of climate and social issues, the integration of sustainable financial practices into the trade finance industry has become popular.
• Growing technological advancement - The trade finance market expansion is supported by the rapid development of modern technologies and digitalization. In order to avoid fraud and errors, the use of Blockchain technology has introduced transparency and safety into supply chain finance and trade settlement.
  
  Artificial intelligence and data analysis have been introduced to improve risk assessment and to make more accurate credit decisions to bridge the funding gap for SMEs. Innovative digital platforms were created by the Fintech Startups, to increase accessibility and affordability.

Challenges

• Complication associated with trade finance deals - The global trade finance market is expected to face a challenge from the complexity of trade finance transactions, as well as higher risks related to trade finance.
• Regulatory standards are anticipated to hinder market growth between 2023-2036.
• Accessibility to finance is another significant factor hampering the growth of the market during the forecast period.