Supply Chain Finance Market Expected to Reach $13.4 Billion by 2031—Allied Market Research

According to a new report published by Allied Market Research, titled, “Supply Chain Finance Market By Offering (Export And Import Bills, Letter Of Credit, Performance Bonds, Shipping Guarantees, Others), By Provider (Banks, Trade Finance House, Others), By Application (Domestic, International), By End User (Large Enterprises, Small And Medium-Sized Enterprises): Global Opportunity Analysis And Industry Forecast, 2022-2031". The supply chain finance market was valued at $6 billion in 2021, and is estimated to reach $13.4 billion by 2031, growing at a CAGR of 8.8% from 2022 to 2031.

Supply chain finance market is projected to witness a significant growth, due to increased disruption and advances in technology, to enhance digitized supply chain finance in the market. The market is largely fragmented, due to higher involvement of several traders, importers, and exporters globally. In addition, traditional trade is changing the historic favorable letter of credit and promissory note and bill of exchange has become less common and replaced by an increase in open account trade and finance. Moreover, the development of technologies such as Optical Character Recognition (OCR) to read container numbers, Radio Frequency Identification (RFID) and Quick Response (QR) codes to identify and trace shipments, blockchain, and enhancing digitization of trade documents drive the market growth.

Supply chain trade finance providers have an immense potential to expand products and services in the supply chain finance market trends. Companies invest in high-end technology such as artificial intelligence, and machine learning that can not only integrate a trader’s electronic communications and trades but also ensure firms to detect patterns across multiple data sets and can improve on its detections which leads to online supply chain finance practices.

Further, dynamic discounting was gaining popularity as a way for buyers to optimize their working capital while providing suppliers with early payment options. This approach helps strengthen relationships between buyers and suppliers by offering flexibility in payment terms. Furthermore, the disruptions caused by events like the COVID-19 pandemic highlighted the importance of supply chain resilience. Supply chain finance was being used to strengthen supplier relationships and ensure smoother operations during times of uncertainty. 

By end user, the large enterprises segment acquired a major share. This is attributed to the fact that larger enterprises have a production on a large scale which caters for high supply demand from the suppliers.

Region wise, Asia-Pacific dominated the supply chain finance market size in 2021. This was attributed to the that fact the governments in these countries have started to invest heavily in supply chain finance systems owing to the increased security concerns from financial institutions for trading activities. In addition, the supply chain finance is getting significant traction in the Asia-Pacific region owing to surge in number of cases of market abuse and frauds along with growing complexities of regulatory compliance requirements in banks, and financial institutions.

Increase in insecurity of income, employment, and restrictions in travelling across countries have negatively impacted the supply chain finance market growth owing to rise in number of remote locations, which causes financial firms to rethink about the supply chain of businesses or cash flow working from home by compliance processes. However, consecutive lockdowns, social distancing norms, stay at home strategy, and increased number of COVID-19 positive cases have increased the demand for various new technologies such as electronic invoicing, mobile internet access, blockchain, artificial intelligence, and big data for protecting the interest of the parties involved in the transactions. This propelled the growth of supply chain finance industry during the pandemic.     

Key Findings of the Study

• By end user, large enterprises segment accounted for the highest supply chain finance market share, in terms of revenue in 2021.
• By provider, the trade finance house segment is expected to exhibit the fastest growth rate during the forecast period in supply chain finance market.
• Region wise, Asia-Pacific generated the highest revenue of supply chain finance market size in 2021.  

The key players operating in the supply chain finance market analysis include Asian Development Bank, BNP Paribas, Bank of America Corporation, Citigroup, Inc., Eulers Herms (Allianz Trade), HSBC Group, JPMorgan Chase & Co., Mitsubishi UFJ Financial Group, Inc., Royal Bank of Scotland Plc, and Standard Chartered. These players have adopted various strategies to increase their market penetration and strengthen their position in the industry.