Global demand for trade finance is poised for an upswing as businesses reconfigure supply chains and diversify trading partners in response to rising geopolitical tensions and shifting market dynamics, according to the latest Global Trade Finance Gap Survey published by the Asian Development Bank (ADB). The report, which draws on responses from over 110 financial institutions representing up to one-third of the global trade finance market, highlights both enduring challenges and emerging trends in financing cross-border trade.

At the heart of the survey's findings is the persistent trade finance gap, the shortfall between the demand for financing to support international trade and the supply of available trade finance products. In 2025 this gap remained broadly unchanged at an estimated USD 2.5 trillion, accounting for around 10 per cent of global trade flows. While this figure has stabilised since 2023, it has grown significantly from about USD 1.5 trillion in 2015, underscoring deep-rooted structural barriers to inclusive trade finance.

The ADB report emphasises that trade finance remains central to economic development and market participation. Without adequate financing, companies, particularly small and medium-sized enterprises (SMEs), struggle to engage in export and import transactions. SMEs often find financing harder to secure due to perceived higher risk, limited collateral and compliance challenges, despite representing a substantial portion of global trade activity. Although some progress has been made in narrowing rejection rates for SME trade finance applications, the survey indicates much work remains to ensure these firms can access the liquidity they need.

A key insight from the report is the anticipated rise in demand for trade finance as firms respond to broader shifts in global supply chains. With continuing geopolitical tensions, firms are increasingly diversifying markets beyond traditional corridors, deepening intra-regional trade links and establishing alternative sourcing routes. About 80 per cent of surveyed banks project that these developments will spur greater demand for capital and risk mitigation tools, ranging from letters of credit and guarantees to supply chain finance solutions.

Yet, while banks expect a growth in demand, several supply-side constraints persist. Structural impediments such as know-your-customer (KYC) complexities, correspondent banking limitations and uneven application rates from SMEs continue to temper the expansion of trade finance supply. These constraints not only restrict the volume of financed trade but also amplify costs and risk perceptions that can deter lenders from broadening their portfolios.

The ADB report also underscores the importance of digitalisation and risk-management innovations in reshaping the trade finance landscape. Technologies such as artificial intelligence (AI) are increasingly utilised by financial institutions to enhance risk assessment and fraud detection, helping to streamline processes and potentially expand financing capacity. Digital platforms and scalable solutions are seen as crucial enablers to bridge gaps in finance delivery, especially for underserved segments of the market.

Summarising, the Asian Development Bank's survey paints a picture of a trade finance sector at a crossroads. Demand is rising as supply chains evolve, but systemic gaps remain that could hamper the ability of businesses, especially smaller players, to fully participate in global commerce. Addressing these challenges will call for stronger cooperation among banks, regulators and development institutions, as well as continued investment in technology and risk-sharing mechanisms to unlock the full potential of international trade.

Further information: https://www.adb.org/news/demand-trade-finance-rise-amid-supply-chain-realignment-adb-report

This article presents the views of the author and not necessarily those of ICC.