PUBLISHER: Market Xcel - Markets and Data | PRODUCT CODE: 1536772
PUBLISHER: Market Xcel - Markets and Data | PRODUCT CODE: 1536772
Global supply chain finance market is projected to witness a CAGR of 8.67% during the forecast period 2024-2031, growing from USD 6.58 billion in 2023 to USD 12.80 billion in 2031. Factors such as surge in trade wars, increased competition and new agreements regarding supply chain finance, increase in the need for safety and security of supplying activities, rise in adoption of supply chain finance by small and medium-sized enterprises in developing countries, enhanced data analytics, regulatory adaptation, and advancement in technology have led to the growth in the supply chain finance market. Supply chain finance or supplier finance is a solution in which suppliers can receive early payments on their invoices. It is a tech-based business and financing process that reduces costs and improves efficiency for all the parties involved in the transaction. It provides buyers and sellers with a short-term loan that optimizes their working capital.
In May 2024, Citigroup Inc. and the Asian Development Bank came together to sign a risk participation agreement to boost access to supply chain financing for small and medium-sized enterprises and support of around USD 100 million in annual trade across Asia-Pacific. Overall, the new supply chain finance technologies will offer enormous value for banks, buyers, and suppliers stimulating finance quickly and easily.
Security of Activities Related to Supply Chain Finance to Fuel Market Growth
The exploitation in the market, such as loss of investor confidence, damaging market probity, fraud behavioral patterning, and insider business pressure on financial firms for them to make investments in supply chain finance approaches, has increased the demand for the same. Supply chain finance allows collecting and survey multiple structured and unstructured datasets together and provides financial security to an importer and exporter in the form of payment and supply risk. Earlier in international trade, many exporters were unsure when the importer would pay them for their goods. Over the years, exporters tried to find solutions to reduce the non-payment risk from importers. On the contrary, the importers were worried about making early payments for goods, as they had no guarantee of whether the seller would ship the goods. Supply chain finance has grown to address all of these risks by speeding up payments to exporters and ensuring importers that all the goods have been shipped with the letter of credit.
Technological Advancements to Boost Market Growth
Rapid digitalization and technological advancements are boosting supply chain finance solutions. The rise in the adoption of cutting-edge FinTech solutions are expected to remain crucial factors for driving the proliferation of the supply chain finance market. FinTech solutions play an important role in optimizing financial transactions within supply chains, increasing efficiency, transparency, and flexibility. The adoption of blockchain technology and smart contracts offers transparency, security, and trust to supply chain finance. Blockchain provides constant record-keeping, securing the integrity of transactions and minimizing fraud risks.
Moreover, the integration of data analytics and artificial intelligence with supply chain finance is increasing reliance of companies on predictive analytics to identify potential risks and opportunities allowing them to make appropriate decisions. In 2023, Oracle introduced new features in the Oracle Fusion Cloud Applications Suite that will help customers accelerate supply chain planning, increase operational efficiency, and improve financial accuracy. It includes fresh planning, usage-based pricing, and remitting management capabilities within Oracle Fusion Cloud Supply Chain & Manufacturing (SCM) and enhanced quote-to-cash processes in Oracle Fusion Applications.
Banks to Dominate the Global Supply Chain Finance Market
With maximum share, banks dominate the global supply chain finance market. A collection of tech-based businesses and financing practices called supply chain finance helps all the parties to save money and work more effectively and efficiently. Banks offer a wide variety of financing options, including working capital loans, invoice discounting, and letters of credit. Moreover, they leverage vast networks, financial expertise, and access to capital to enable businesses with crafted financing solutions. They help companies manage financial risks associated with their supply chains, thus providing risk mitigation services.
Bank of America initiates to digitize trade finance through its new platform, "CashPro Supply Chain Solutions, which is aimed at optimizing working capital. The first module is Open Account Automation, which reduces invoice approval times, indicating a shift from days or weeks to minutes.
Asia-Pacific to Dominate the Global Supply Chain Finance Market Share
Asia-Pacific is dominant in the global supply chain finance market due to the increase in government investment in supply chain finance systems in the region due to increasing security concerns from financial institutions. One of the reasons is the shift in global production with an increase in the amount of goods coming from Asia, traded within Asia, and going to major global markets. The region specializes largely in its export-led economic model and the vital importance that commerce plays in the region's economy with highly populated countries such as India and China.
Along with it, Asia-Pacific is home to a vast pool of investors and financial institutions who are supporting the development and expansion of supply chain finance programs in the region. In 2023, Deutsche Bank announced a partnership with The Asian Development Bank to make supply chain financing more convenient for small and medium-sized enterprises in Asia-Pacific through an agreement that would facilitate over USD 200 million in additional trade in the region every year.
Future Market Scenario (2024 - 2031F)
The supply chain finance market is growing at a fast pace and the advancements made by key players will lead to a completely new level in the forecast period.
In March 2024, Muthoot FinCorp partnered with Veefin Solutions Ltd. to start supply chain finance operations in India. It will utilize Veefin's suite of solutions across all supply chain finance products, which include onboarding suppliers and vendors, underwriting their loans, and managing transactions on the Loan Management Solution.
The Hongkong and Shanghai Banking Corporation Limited (HSBC), in September 2023, announced the launch of HSBC TradePay, an industry-first, document-free trade finance solution that provides clients with instantly drawdown trade loans and pay suppliers.
Key Players Landscape and Outlook
The supply chain finance market is highly competitive as the companies are offering working capital loans and other financial products that help an organization meet its operational needs. In different economies, companies use techniques such as partnerships, collaboration with fintech companies, and mergers and acquisitions to provide the best products that will lead to growth in the market. These techniques drive innovation, efficiency, and market expansion which will lead to a dynamic business environment. In September 2023, HSBC partnered with Alibaba Group's logistics platform Cainiao Network Technology to provide digital trade finance solutions for online merchants. It will use real-time logistics information to meet the needs of the new economic enterprises.
In September 2023, The International Finance Corporation (IFC) and Citi Bank agreed to launch a USD 300 million facility pilot under the IFC's newly established Global Supply Chain Finance Program (GSCF). The pilot will provide supply chain finance to suppliers and buyers in emerging markets, aiming to ease constraints and boost market resilience amid global economic uncertainty.
All segments will be provided for all regions and countries covered
Companies mentioned above DO NOT hold any order as per market share and can be changed as per information available during research work