Bank Guarantee Market Expected to Reach $41.48 Billion By 2030

According to a recent report published by Allied Market Research, titled, “Bank Guarantee Market By Type, Application, Enterprise Size, and End User: Global Opportunity Analysis and Industry Forecast, 2021–2030”, the global bank guarantee market size was valued at $20.28 billion in 2020, and is projected to reach $41.48 billion by 2030, growing at a CAGR of 7.3% from 2021 to 2030.

Banks are majorly engaged in providing bank guarantees to traders for executing large international transactions as well as domestic trading. As seller possesses lack of knowledge about the buyer, the need for bank guarantee continues to rise among sellers. Moreover, banks provide performance bank guarantee, guarantee letter, and payment guarantee letter which essentially guarantees that the goods and services provided to a buyer are as promised and delivered as agreed by contract with the seller, and if it does not meet the expectations of the buyer, then the buyer has the right to deny payment for the goods and services.

Factors such as digitalization and use of technology such as block chain in the field of financing and reduction in risk of default payment propel the growth of the bank guarantee market. In addition, improved trade relation among neighboring countries along with surge in government support & initiatives toward bank guarantee products are expected to provide lucrative opportunities for the bank guarantee providers.

On the basis of end user, the importer segment is expected to grow at the highest CAGR during the forecast period and is projected to maintain its dominance in the bank guarantee market. This is attributed to the fact that importers are increasingly engaged in massive trades by importing bulk of goods from different countries, which involve complex transactions. Therefore, demand for bank guarantee among importers continues to rise and become major market trends.

By region, the global bank guarantee industry is being dominated by Asia-Pacific in 2021, and is expected to maintain this trend during the forecast period. Major factors that contribute toward bank guarantee market trends in Asia-Pacific include the process of digitalized bank guarantee with the help of various technologies such as optical character recognition (OCR), machine learning automation, and distributed ledger, block chain. In addition, technological advancement in the field of financing has given rise to new business practices and these forces have changed the financial services industry.

The global market has been severely affected due to the business interruptions caused during the global health crisis. In addition, the halt in international trade due to travel ban caused huge financial losses for the traders, which resulted in many traders closing their business operations. Moreover, consequent lockdown has disrupted supply chains, which, in turn, has resulted in a situation wherein buyers failed to pay dues to manufactures. As a result, these major factors affected the bank guarantee market growth during the pandemic situation.

Key Findings of the Study

• By type, the financial guarantee segment led the highest bank guarantee market share, in terms of revenue in 2020.
• On the basis of enterprise size, the small enterprises segment is expected to exhibit the fastest growth rate during the forecast period.
• Region wise, Asia-Pacific generated the highest revenue in 2020.

The key players that operate in the bank guarantee market analysis includes BNP Paribas, Citibank Inc., DBS Bank Ltd., Deutsche Bank AG, HSBC Holdings plc, HDFC Bank Ltd., ICICI bank Limited, JPMorgan & Chase, Royal Bank of Scotland plc, Wells Fargo. These players have adopted various strategies to increase their market penetration and strengthen their position in the industry.