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UK fintech funding rallied in the first half of 2020 amid the coronavirus pandemic

Insurtech and payments saw an increase in funding, while digital banking funding decreased by almost a third.

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Tom Graham/Accenture

Despite the global coronavirus pandemic, fintech funding saw a slight uptick in the first half of 2020 compared to the same period in 2019, according to new research from Accenture.

Fintech investments were up 3.8 per cent in the first half of 2020 to just over £2bn, up from £1.9bn in the first half of 2019. 

The slight increase can largely be attributed to a surge in investment across insurtech and payments startups,  data from CB Insights. analysed by Accenture.

Investment in insurtech saw the largest increase, increasing by 66 per cent from £97m in 2019 to £161m in 2020 and payments-focused fintechs followed, seeing a 5.3 per cent increase on 2019 to £760m. 

Tom Graham, a managing director in Accenture’s banking practice and its UK fintech lead, said: “While overall investment may look positive in light of COVID-19, where that investment is going reflects the current environment and we expect to see the pandemic bite in the coming months.”  

“Investment surges in areas like payments signal backing for the fintech ‘beneficiaries’ in the pandemic – start-ups who offer technologies that support long-term societal shifts driven by COVID - like digital ways to pay.”  

Accenture’s analysis also showed that investors favoured later stage ventures in the first half of 2020, compared to the first half of last year. 

Late stage fintechs received 114 per cent more funding, a jump from £460m in 2019 up to over £900m in 2020, while early stage fintechs investment almost halved, dropping from £314m in the first half of 2019 to just £174m in 2020. 

Similarly, investment in UK digital banking services fell by almost a third (29 per cent) from £355m in the first half of 2019 to £350m in the same period this year. 

The number of UK fintech deals also rose from 163 in the first half of 2019 to 176, an 8 per cent jump, meaning the UK still remains the second largest fintech market in the world, trailing behind the US, which saw a slight decrease in the value of fintech deals made from 2019 to 2020, a 9.1 per cent drop to £8.8bn. 

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