Market Potential, Current Size and Growth The current, global market size for supply chain finance is estimated at $ 275 billion of annual traded volume, which translates to approximately $ 46 billion in transactions with an average 60-day payment term. It is still relatively small compared to the market size of other invoice finance solutions such as factoring, which remains the largest trade finance segment and is primarily domestic in focus.
The potential market for supply chain finance for OECD (Organization for Economic Co-operation and Development) countries is significant and is estimated at $ 1.3 trillion in annual traded volume. The market serving European supply chains is approximately $ 600 billion. Based on these figures, the potential supply chain finance market size for the US is estimated to be approximately $ 600 billion in traded volume per annum.
Market experts estimate that only 10 percent of the global available marketplace has been satisfied with supply chain finance solutions, revealing a large potential market for growth. The market is expected to continue to expand strongly in the coming years at approximately 20 to 30 percent per annum and 10 percent per annum by 2020.
The highest growth of supply chain finance programs is in the US and Western Europe. Asia – India and China in particular – is considered the market with the most potential in the coming years. The forces driving the rapid growth of supply chain finance programs are:
Challenges to Further Growth Although supply chain finance is experiencing significant growth in demand, financial institutions are focused mainly on the large buyer side of the trade equation. As structured solutions traditionally have been designed and provided by banks specifically for large international trading companies, they do not use common foundations. In order for supply chain finance to take off on a broad scale, a fresh impetus is needed. A tipping point could easily be reached by solving the following challenges:
Players and the Main Solutions Used in the Market Supply chain finance practices have been in place for over a decade. Three distinctive supply chain finance structures have crystalized:
In terms of market share, supply chain finance is managed mainly by a handful of players, including large commercial banks such as Citibank, JPMorgan, Deutsche Bank, HSBC, Santander and PrimeRevenue, the leading multi-bank platform.
Together they manage about 40 percent of market share. The rest of the supply chain finance is serviced and funded by a variety of local banks and small, independent service providers.
PrimeRevenue is the largest supply chain finance platform in the market, has partnerships with more than 40 banks and other financial institutions, and is responsible for more than 10 percent of global market share in terms of managed trading volume. The multi-banking platform manages the largest supply chain finance programs in the world, including Volvo, Whirlpool and several others facilities from global organizations.
