Performance Bank Guarantee Market Expected to Reach $20.7 Billion by 2032—Allied Market Research

According to a new report published by Allied Market Research, titled, “Performance Bank Guarantee Market, By Application (International, Domestic), By Enterprise Size (Large Enterprises, Small And Medium-Sized Enterprises), By End User (Exporters, Importers): Global Opportunity Analysis And Industry Forecast, 2023-2032". The performance bank guarantee market was valued at $8.8 billion in 2022, and is estimated to reach $20.7 billion by 2032, growing at a CAGR of 9.2% from 2023 to 2032.

The performance bank guarantee market is witnessing some important trends driving its growth. One major trend is the increasing use of technology. Banks and companies are now using digital systems to issue and manage these guarantees, making the process faster and more efficient. Furthermore, the need for performance guarantees has grown, boosting the market growth, as companies work with partners and clients in different countries. In addition, industries like construction and real estate are relying majorly on these guarantees to ensure that projects are completed as promised.

Moreover, there is a rise in awareness among businesses about risk management, and performance bank guarantee is seen as a smart way to protect investments. These performance bank guarantee market trends are projected to boost the growth of the performance bank guarantee market.

Furthermore, players in the performance bank guarantee market are undertaking various strategies to enhance their market offerings and stay competitive. For instance, on January 13, 2023, State Bank of India (SBI) launched e-Bank Guarantee (e-BG) facility in association with National e-Governance Services Ltd (NeSL). This facility will bring about a revolutionary change in the banking ecosystem, where bank guarantee is frequently used in large volumes. Bank has taken this initiative to enhance transparency and reduce turnaround time from days to minutes. NeSL’s Digital Document Execution (DDE) platform, which provides e-Stamp and e-Sign functions, will facilitate the e-Bank Guarantee process. Furthermore, on May 11, 2023, Bank of Baroda announced the launch of the Electronic Bank Guarantee (BG) system in partnership with National E-Governance Services Limited (NeSL), the government-backed Information Utility appointed by the Insolvency and Bankruptcy Board of India. The new facility will enable the public sector bank to issue inland bank guarantees electronically on its digital platform BarodaINSTA. Therefore, such strategies adopted by the market players will provide major lucrative opportunities for growth of the performance bank guarantee market.

By  end user, the importers segment acquired major share in 2022 in the performance bank guarantee market growth. Importers, who bring in goods or services from foreign markets, often require performance guarantees from their suppliers to ensure the timely and satisfactory delivery of the contracted items. This is particularly crucial in international trade where distances and regulatory differences can pose challenges. By obtaining a performance bank guarantee, importers mitigate the risk of non-compliance or substandard deliveries, thereby safeguarding their investments and maintaining the integrity of their supply chains. On the other hand, the exporters segment is poised for significant growth during the forecast period. This surge can be attributed to an increasing trend in global commerce. Exporters, seeking to expand their market reach and tap into international opportunities, are increasingly recognizing the importance of offering performance guarantees to their overseas clients. Providing such assurances not only instills confidence in their capabilities but also establishes a competitive edge in the global market.

Based on region, Asia-Pacific secured the highest market share in the performance bank guarantee market size in 2022 and it is poised for significant growth in the performance bank guarantee market during the forecast period. This can be attributed to the evolving regulatory environments in Asia-Pacific that are gradually aligning with global standards, encouraging the adoption of these financial instruments. The expanding middle class and burgeoning infrastructure projects in the region also fuel the demand for performance bank guarantees, making Asia-Pacific a key growth market in the future.

The impact of COVID-19 on the performance bank guarantee industry was mixed. Initially, there was a negative effect as economic uncertainties led to a slowdown in some industries. This resulted in a temporary decrease in demand for guarantees. However, as businesses adapted to new challenges, the market saw a positive rebound. Companies increasingly sought performance guarantees to ensure stability and trust in their transactions, especially in the uncertain business environment created by the pandemic. So, while there was an initial setback, the market ultimately showed resilience and a positive trajectory in response to evolving business needs during the pandemic.

Key Findings of the Study

• By application, the international segment led the highest performance bank guarantee market share, in terms of revenue in 2022.
• On the basis of enterprise size, the large enterprises segment is expected to exhibit the fastest growth rate during the forecast period.
• Region wise, North America generated the highest revenue in 2022.  

The key players operating in the performance bank guarantee market analysis include HDFC Bank Ltd, DBS Bank, Wells Fargo & Company, Citigroup, United Overseas Bank Limited, JPMorgan Chase & Co, UBS Group AG, Macquarie Group Limited, Duetsche Bank, and Federal Bank. These players have adopted various strategies to increase their market penetration and strengthen their position in the performance bank guarantee industry.