Global credit markets in flux, driven by risk, technology

Several recent market analyses have painted a picture of different aspects of global credit. While most reveal – and forecast – growth in all segments of the credit market, the improved prospects for global credit do not rule out increased risk.

Credit insurance market
According to a recently published report by market intelligence aggregator, the credit insurance sector is projected to grow between now and 2019. The report focused on the trade credit insurance segment of the market, showing that boldness in worldwide trading appears to be driving an increase in insurance schemes to protect investments.

This can be attributed to the emergence of developing economies as potential players in global trade. Facilitated by multiple distribution channels, Global Newswire reports that investors who are increasingly doing business with these economies require some degree of unique and effective credit products. To help mitigate the risk of default on loans, credit insurance is being purchased at higher rates, though the report cautions that greater customization is needed in insurance products to “match the needs of [the] various players.”

Global credit growth
The historical data on the growth of the credit market is supported in findings by Fitch Ratings’ latest Macro-Prudential Monitor. In the report for 2015, Fitch found that global credit did rise to 4.7 percent throughout the year, while still remaining under its peak of 5.6 in 2010. This positive growth was driven by markets in the developing world, with Asia and Latin America being particular hotspots of improvement.

For 2016, Fitch is forecasting deceleration to 3.7 percent, driven by global weak economic performance, market volatility and tightening financing. Asia is projected to remain a strong player in global credit, driven largely by developing economies like India and in spite of stumbles in the Chinese economy.

Credit Debit Payment Market
Finally, research from NOVONOUS estimates that the global credit debit payment market is projected to grow dramatically between 2016 and 2020, with a CAGR of 14.87 percent. This can be attributed to the rapid rise of ecommerce and mobile payment acceptance.

The vast majority of this growth and activity – 87 percent, according to the report – is taking place in the developed world, led by North America, Europe and Asia-Pacific. Asia-Pacific experienced the most dramatic growth across the market throughout 2014 and is expected to lead growth moving into the next decade. This will shift somewhat as developing economies in Latin America and elsewhere begin adopting more widespread usage of payment cards, but is expected to stay mostly first-world-dominated. Visa has maintained a large share, holding on to about 60 percent of the total market since 2014 and nearly 40 percent of all debit cards across the globe.

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