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2021
Financial Guarantee Market

Financial Guarantee Market

by Product Type (Bank Guarantees, Documentary Letter of Credit, Standby Letter of Credit (SBLC), Receivables Financing, and Others), Enterprise Size (Small Enterprises, Medium-sized Enterprises, and Large Enterprises), and End User (Exporters and Importers): Global Opportunity Analysis and Industry Forecast, 2021-2030

Report Code: A14515
Pages: 280
Nov 2021 | 2585 Views
Author(s) : Aarti G, Pramod B , Vineet K
Tables: 117
Charts: 70
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COVID-19

Pandemic disrupted the entire world and affected many industries.

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Financial Guarantee Market Outlook-2030

The global financial guarantee market size was valued at $28.70 billion in 2020, and is projected to reach $71.93 billion by 2030, growing at a CAGR of 9.6% from 2021 to 2030. 

Due to increased uncertainty and protectionism in global trade, shifts in supply chain demands, and business closures across several industry verticals, the COVID-19 pandemic have had a negative impact on the financial guarantee market. Furthermore, in order to stop the virus from spreading, numerous government authorities in various nations had enacted strict trade restrictions, resulting in geopolitical tensions and a rapid shift in trade patterns.

A financial guarantee in the corporate world is a non-cancellable indemnity. This is a bond backed by an insurer or other secure financial institution. It gives investors a guarantee towards the payment of principal and interest amounts within a contract. Many insurance companies specialize in financial guarantees and similar products used by debt issuers as a way of attracting investors. Moreover, the guarantee gives investors comfort that the investment will be repaid if the securities issuer does not fulfill the contractual obligation to make timely payments. 

Financial-Guarantee--Market-2021-2030

Financial guarantee helps the businesses to recover the loss owing to deferred payments from debtors. In addition, financial guarantee reduces the risk and mistrust between seller and consumer by acting as an assurer. Therefore, increasing financial risk involved in business transactions in driving the growth of the market. The financial guarantees require less documentation and therefore, processing of loan becomes easier and simple for the banks. Therefore, this is a major growth factor for the growth of the market. However, an individual with a poor credit history cannot obtain a financial guarantee for the business or other activities. Thus, strict assessment by the banks before providing financial guarantee is restraining the growth of the market. Contrarily, the automation of document verification and credibility checking procedures have increased the efficiency of the banks. Moreover, the automation of the documentation procedures has decreased loan application delays and made it more convenient for consumers. Thus, digitalization of banking procedures to obtain financial guarantee will provide various growth opportunities with technological advancements in future.

Financial Guarantee Market
By Product Type

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Bank Guarantees Segment holds a dominant position throughout the forecast period.

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The report focuses on growth prospects, restraints, and trends of the financial guarantee market analysis. The study provides Porter’s five forces analysis to understand the impact of various factors, such as bargaining power of suppliers, competitive intensity of competitors, threat of new entrants, threat of substitutes, and bargaining power of buyers, on the financial guarantee market.

Segment Review

The financial guarantee market is segmented on the basis of product type, enterprise size, end user and region. By type, the market is segregated into bank guarantees, documentary letter of credit, standby letter of credit (SBLC), receivables financing, and others. Depending on enterprise size, it is fragmented into small enterprises, medium-sized enterprises, and large enterprises. On the basis of end user, it is bifurcated into exporters and importers. By region, it is analyzed across North America, Europe, Asia-Pacific, and LAMEA. 

The report analyzes the profiles of key players operating in the financial guarantee market such as Asian Development Bank, BNP Paribas, Barclays, Bank of Montreal, Citibank, HSBC, ICBC, National Bank of Canada, SINOSURE and Scotia Bank. These players have adopted various strategies to increase their market penetration and strengthen their position in the financial guarantee market.   

Financial Guarantee Market
By Enterprise Size

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Small-sized Enterprises segment will grow at a highest CAGR of 13.7% during 2021 - 2030.

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COVID-19 Impact Analysis

Due to increased uncertainty and protectionism in global trade, shifts in supply chain demands, and business closures across several industry verticals, the COVID-19 pandemic has had a negative impact on the financial guarantee market. Additionally, the government's lockdown has impacted a number of SMEs that rely on financial guarantees to develop their businesses. However, due to certain policy measures introduced by government, some businesses had managed to remain afloat in the market. In addition, certain relaxation in interest rates by the authorities have helped many businesses to obtain financial guarantees to expand their businesses. Thus, the COVID-19 had a negative impact on financial guarantee industry.  

Top Impacting Factors

Rise in Import and Export Activities in Developing Countries

Consumer items, motor vehicles & components, electronic & electrical equipment, industrial machinery, industrial chemicals, and plastic & rubber products are all imported by many countries. Furthermore, numerous nations export crude oil, automobiles, and gold. These items are in high demand, and is expected to continue to this trend in the upcoming years. As a result, surge in import and export activity is expected to give lucrative opportunities for the financial guarantee sector to expand, as more buyers and sellers seek financial guarantees from banks. Thus, rise import and export activities in developing countries is expected to open new avenues for the growth of the market.   

Increasing Adoption Of Financial Guarantees by SMEs 

Guarantees are often charged at a low rate by banks, which is advantageous to small businesses. As a result, it enables SMEs to utilize available extra funds which further fuels the market growth. In addition, the necessity for fewer documentation for a financial guarantee has made it convenient for SMEs to get loans. Additionally, the fees charged by banks is very nominal due to which it is a cost-effective solution for the SMEs. Furthermore, financial guarantees assist SMEs in maintaining a positive credit score in order to get larger loans in the future. Hence, the adoption of financial guarantee provides several benefits to SMEs. Thus, the increasing adoption of financial guarantees by SMEs is propelling the financial guarantee market growth.

Financial Guarantee Market
By Region

2030
Asia-pacific 
North America
Europe
LAMEA

Asia-Pacific would exhibit the highest CAGR of 12.0% during 2021-2030

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Strict Assessment by the Banks Before Providing Financial Guarantee  

When a customer contacts a bank for a bank guarantee, the bank evaluates the customer's creditworthiness as well as financial health. Before issuing a guarantee, the bank conducts a thorough financial investigation of the applicant. This procedure can become rather difficult at times, resulting in either no guarantee or significant delays in obtaining a guarantee. Moreover, an individual with a poor credit history cannot obtain a financial guarantee for businesses or other activities. Thus, the strict assessment by the banks before providing financial guarantee is restraining the growth of the market.

Key Benefits for Stakeholders 

  • The study provides in-depth analysis of the global financial guarantee market share along with current & future trends to illustrate the imminent investment pockets.
  • Information about key drivers, restrains, & opportunities and their impact analysis on the global financial guarantee market size are provided in the report.
  • Porter’s five forces analysis illustrates the potency of buyers and suppliers operating in the financial guarantee market forecast.
  • An extensive analysis of the key segments of the industry helps to understand the global financial guarantee market trends.
  • The quantitative analysis of the global financial guarantee market share from 2021 to 2030 is provided to determine the market potential.

Financial Guarantee Market Report Highlights

Aspects Details
By Product Type
  • Bank Guarantees
  • Documentary Letter of Credit
  • Standby Letter of Credit (SBLC)
  • Receivables Financing
  • Others
By Enterprise Size
  • Small Enterprises
  • Medium-sized Enterprises
  • Large Enterprises
By End User
  • Exporters
  • Importers
By Region
  • North America  (U.S, Canada, Mexico)
  • Europe  (Germany, France, UK, Italy, Spain, Russia, Rest of Europe)
  • Asia-Pacific  (China, Japan, India, Australia, South Korea, Rest of Asia-Pacific)
  • LAMEA  (Brazil, Turkey, Saudi Arabia, South Africa, Rest of LAMEA)
Key Market Players Asian Development Bank, BNP Paribas, Barclays, Bank of Montreal, Citibank, HSBC, ICBC, National Bank of Canada, SINOSURE, Scotia Bank
 

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The imposition of lockdown during the start of the pandemic have forced the banks and financial institutions to close their branches temporarily and halt the operations. However, after certain time the banks and financial institutions were allowed to operate as it was considered in essential services. But the customers visiting the branches decreased owing to fears of virus. Moreover, customers and the employees were hesitant to carry or touch the documents for documentation of the loans.

Furthermore, the banking processes used to cost a long waiting time owing to social distancing norms in the branch and offices. In addition, the major trends in the financial guarantee market are increasing financial risk in the business transactions due to inability of small businesses and the fees charged by banks for financial guarantee is very nominal due to which it is a cost-effective solution for the SMEs to avail financial guarantee products. Moreover, the digitalization of the verification processes by the banks have made the documentation process of obtaining financial guarantee much quicker and efficient during the pandemic situation.

The Asia-Pacific financial guarantee market is growing exponentially primarily due to a strategical priority for trade finance by attracting non-bank capital and accelerating further trade expansion in the region. Furthermore, Asia-Pacific presents lucrative opportunities for the players operating in the global financial guarantee market, which is attributed to its growth in new technologies and simplifying process in financial guarantee, and favorable government processes for trade documents. Some of the key players profiled in the report include analyzes the profiles of key players operating in the financial guarantee market such as Asian Development Bank, BNP Paribas, Barclays, Bank of Montreal, Citibank, HSBC, ICBC, National Bank of Canada, SINOSURE and Scotia Bank. These players have adopted various strategies to increase their market penetration and strengthen their position in the industry.

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FREQUENTLY ASKED QUESTIONS?

A. The Financial Guarantee Market is estimated to grow at a CAGR of 9.6% from 2021 to 2030.

A. The Financial Guarantee Market is projected to reach $71.93 billion by 2030.

A. To get the latest version of sample report

A. The adoption of financial guarantee provides several benefits to SMEs. Thus, the increasing adoption of financial guarantees by SMEs is propelling the financial guarantee market growth.

A. The key players profiled in the report include Asian Development Bank, BNP Paribas, Barclays, Bank of Montreal, Citibank, HSBC, ICBC, National Bank of Canada, SINOSURE and Scotia Bank, and many more.

A. On the basis of top growing big corporations, we select top 10 players.

A. The Financial Guarantee Market is segmented on the basis of product type, enterprise size, end user and region.

A. The key growth strategies of Financial Guarantee market players include product portfolio expansion, mergers & acquisitions, agreements, geographical expansion, and collaborations.

A. Bank Guarantees Segment holds a dominant position throughout the forecast period.

A. Small-sized Enterprises segment will grow at a highest CAGR of 13.7% during 2020 - 2030.

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