As we move into the second decade of the new millennium, financial institutions are looking at fintech investment as an area for focus and growth. Robust growth is key for any healthy financial institution. While traditional investment banking is still a strong and viable force in our economy, fintech is seeing an unprecedented rise in growth. So, is it all positive for the future of finance and investment?
Overall, the total fintech investment raised across M&A, VC, and PE within the global year ended March 2020 was up slightly from the year ended June 2020, reaching a record high of nearly $60 billion. This was driven primarily by strong growth in core commercial banking (warehousing, support and sales), consumer packaged goods (virtual and point-to-point) and services, energy sector. All markets were affected by the global financial services crisis and heightened volatility, but the overall results showed strong profitability and growth across most sectors.
In terms of the second quarter of this year, we saw some moderation in core commercial banking, but overall, the results were very strong. Consumer packaged goods and services saw softer than expected growth in Q2, but fundamentals are looking strong. Latin America and Asia-Pacific continue to benefit from strong fintech investment. This follows the trend seen in Q2 of last year, where traditional payments providers saw stronger than expected increases. In terms of the broader global picture, this trend is likely to continue well into the next year, as investors look to regain strength and continue to improve performance.
If we looked only at the first quarter, the picture was less dramatic but still quite strong, with overall revenues up 4.3%, above the estimate of analysts. Banking industry revenues were slightly lower, but this was mainly due to increased stamp duty collection and a reduced loan to value ratio. However, total fintech investment was still relatively low at around $5.2 billion. This figure includes investment in technology and innovation by banks and their clients. This represents the bulk of the total fintech investment reported for the second quarter of this year.
In terms of the second half of this year, the focus has turned to the emerging Latin America and Asia-Pacific countries, where fintech investment growth is expected to be strongest. Latin America and Asia-Pacific countries such as Mexico and Peru are experiencing strong consumer demand and good inflation, making new products attractive to the population. The sharp increase in smartphone penetration in these markets is also creating new opportunities for fintech investment. Further encouraging news from bank customers is that more customers are rethinking their traditional banking industries and considering teleseminar based solutions for their small business needs.
From a timing perspective, Latin American and Asian countries offer several options for timing the markets right. One such opportunity is to invest in technology development companies targeting the local market. Although this sector has experienced some financial volatility in the past few years due to the global economic recession, there is still considerable untapped potential. Further, this is largely untapped because only a small percentage of fintech investors have made it to this stage. Another important consideration is the fact that teleseminar based technologies have traditionally had a higher face value than those based on traditional seminars.
At the end of this year, the number of people on the planet will be older than sixty. Many of these senior citizens are not yet able to access the internet. Fintech investment is a good way for older citizens to remain connected, especially if they are restricted to using public Wi-Fi hotspots. Assuming that the number of subscriptions exceeds the available bandwidth, this represents one of the largest potential payouts in terms of fintech h20 19 investment.
There are many opportunities for growth and value extraction from the current investment climate. The primary goal is to identify and focus on companies with the potential to grow their sales or revenues by leaps and bounds. The ultimate objective is to identify the companies most likely to provide the most value to their clients through fintech investment.