The global performance bank guarantee market is experiencing growth and is expected to expand in the upcoming years, owing to rise in trade finance activities. A performance bank guarantee is a form of guarantee offered by a lending institution to the borrowers. In addition, bank guarantee means that the lending company guarantees that the obligations of the debtor are as per the requirement of the bank.
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Furthermore, if the debtor refuses to pay the debt, it will be compensated by the bank. A bank guarantee allows clients or the debtor to purchase goods, buy new equipment or receive a loan. Banks use two type of guarantees direct and indirect, direct guarantees in international or domestic transactions given directly to the beneficiaries. Moreover, direct guarantees are applied where the protection of the bank does not depend on the nature, validity and enforceability of the key obligation. Indirect guarantees shall most frequently occur in the export sector, in particular where government agencies or public bodies are the recipients of the guarantee.
The global performance bank guarantee market is segmented on the basis of type, provider, end user, and region. Based on type, the performance bank guarantee market is bifurcated into payment guarantee and shipping guarantee. In terms of provider, the market is divided into banks and insurance companies. On the basis of end user, the market is categorized into large enterprises and small & medium enterprises (SMEs). Geographically, the market is analyzed across several regions such as North America, Europe, Asia-Pacific, and Latin America, Middle East & Africa (LAMEA).
Key players operating in the global performance bank guarantee industry include Macquarie Group Limited, ICICI Bank Limited, HDFC Bank Ltd., Citibank, Wells Fargo & Company, JPMorgan Chase & Co., UBS Group AG, DBS Bank, United Overseas Bank Limited, and Deutsche Bank AG. These companies have adopted several strategies such as product launches, partnerships, collaborations, mergers & acquisitions, and joint ventures to strengthen their foothold in the global market.
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Top Impacting Factors
Rise in financial risks in trade activities and growing focus of enterprises to mitigate these risks requires against counterparty risks are some of the major factors driving the performance bank guarantee market growth. However, several factors such as the government regulations and growing financial risks associated with defaults are expected to hinder the market growth. Furthermore, rising trade activities in developing countries such as India, Saudi Arabia, and Turkey are expected to provide lucrative opportunities for the market growth during the forecasted period.
Blockchain Technology in Performance Bank Guarantee
Banks are integrating advanced technologies such as blockchain technology to innovate and enhance their business process. Moreover, companies are focused on development of these advanced solutions of banks and other financial institutions. For instance, Primechain Technologies Pvt. Ltd. has developed block chain system for providing banks with blockchain technology implemented in bank guarantee automation systems.
In addition, this technology will help banks with real-time monitoring of the regulators and provides digitally signed bank guarantee letter to the borrower. Furthermore, it also provide different benefits such as it can quickly be incorporated well with bank’s core banking or many legacy software, and increase the security of the certificate provided to the customer digitally.
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Growth in Trend of Express Bank Guarantees
In order to take competitive advantages, many banks are offering express bank guarantees. It helps the required parties to avail bank guarantee in possible less time. For instance, ICICI Bank provides an innovative method of issuance where bank guarantee can only be provided within 3 hours including the facility to register for bank guarantee digitally. Through this digital platform, the client is only needed to visit a branch to collect it. Similarly, Macquarie bank, an investment bank of Australian origin also provides such express bank guarantees. More number of banks are expected to provide these services in the upcoming years.
Key Benefits of the Report
This study presents the analytical depiction of the global performance bank guarantee market forecast along with the current trends and future estimations to determine the imminent investment pockets.
The report presents information related to key drivers, restraints, and opportunities along with detailed analysis of the global performance bank guarantee market share.
The current market is quantitatively analyzed to highlight the global market growth scenario.
Porter’s five forces analysis illustrates the potency of buyers & suppliers in the market.
The report provides a detailed performance bank guarantee market analysis based on the present and future competitive intensity of the market.
COVID-19 Scenario Analysis
COVID-19 has impacted overall value chain of businesses across the globe, especially in major trading countries, such as China and India.
Lockdowns, business shutdowns and government restrictions have disrupted business activities and the fulfillment or execution of contract agreements. As a result, there are several risks for the companies which are expected to rely on Performance Bank Guarantee.
These guarantees are expected to provide securities in case of other parties’ inabilities to meet its obligations under the contract, owing to difficulties caused by the international lockdown.
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