The globaltrade finance market is expected to witness a CAGR of over 4% duringthe forecast period. Certain factors that are driving the market includegrowing number of exports, enhanced cash flow leading to business growth, andemergence of clearing houses.
The increase in exports across the world is due to increasingglobalization and reducing strictness on trade barriers by the World TradeOrganization (WTO). To reduce the significant amount of time in transit, thetrade finance vendors will help domestic enterprises by providing value fortheir product as soon as the shipment leaves the domestic customs. The tradefinance aims to maintain a positive cash-flow cycle during the product transit.The trust between the seller and the buyer is built to facilitate easy trade,as the vendors also take care of the letter of credit. Hence, the growth in thenumber of exports is expected to drive the growth of the trade finance marketduring the forecast period.
Blockchain, artificial intelligence (AI), machine learning (ML),Internet of things (IoT) are among the technologies expected to solve bankingproblems that find applications in trade financing. Various vendors areinvesting in the development of AI-based trade finance platform as theyautomate the process of trading documents and ensures electronic forms arereceived by the right stakeholders at appropriate time during the tradingprocess. Blockchain help in transferring a digital object directly to the beneficiarywithout any chances of sender forging, retaining, or retransferring it. Thus,the incorporation of technology with trade finance will help in improving theefficiency of traded finance process, which will lead to the growth of thetrade finance market.
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