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Banks are upbeat about the trade finance market in spite of Covid-19-related challenges, according to a report by the International Chamber of Commerce (ICC).

The ICC’s 11th annual global survey on trade finance, released this week, brought together the views of 346 respondents in 85 countries, representing global, regional and local banks, and found that, overall, banks around the world are still looking to expand their trade finance business, whether through traditional techniques or emerging solutions in digitisation and supply chain finance (SCF).

“Despite today’s challenging atmosphere, banks around the world are generally optimistic,” the ICC says. “Even in the initial, highly disruptive stages of the global Covid-19 crisis, trade finance has remained available and accessible. In turn, the global survey confirms and reinforces trade finance’s resilient character and adaptability.”

Of all the banks surveyed, 61% indicated that they were planning to expand product offerings, while just over half said that they will be “expanding their market participation”. Just 3% of respondents said that they were looking to reduce products or market reach, which the ICC says reflects the optimism many banks have in their trade finance business.

Despite the ongoing geopolitical dynamics that have disrupted global trade in recent months, respondents predicted growth for trade finance over the coming two years. Fully 86% of respondents in Asia Pacific said they believed demand for trade finance would grow, while 75% said the same for Africa. In Western Europe, respondents were slightly more sanguine, with only 51% saying they expected to see growth.

Asked what they consider to be the priority elements to develop in their trade finance businesses, most respondents pointed to traditional trade finance. That said, SCF and digital trade are an “immediate or near-future priority” for 86% and 84% of banks respectively.

Not everyone is making progress on this front, however. While almost two thirds of global banks surveyed say they currently offer SCF platforms, this figure was only 13% among local banks and 38% among regional banks, a gap which the ICC says is set to broaden. The ICC says this is notable given “clear market trends that continue to reflect growth in open account trade as well as in SCF techniques such as payables finance”, adding that this significant difference may reflect limited appetite, expertise or capacity among smaller banks.

In terms of digitisation, the survey found that 83% of global banks have a digital strategy, versus only 46% of local banks – highlighting another gap between players of different scale and reach. “The chasm between global banks and others in recognising a compelling business case tied to digitisation risks driving further consolidation and concentration in trade financing among banks,” says the ICC.

Other topics – such as sustainability and financial inclusion – are also gaining traction, with 67% of respondents indicating that their bank now has a sustainability strategy. What’s more, the majority of banks surveyed are also integrating sustainability risks into their credit risk management procedures.

There is one caveat to all of this optimism, however. The survey was carried out over eight weeks during February and March, before the full extent of Covid-19 was evident, and the ICC says that it now expects sentiment toward trade finance to be “more cautious” in the short to medium-term.