UK fintech investment drops by more than 50%

Investment into the UK fintech sector fell by 57 per cent in the first half of the year, a new report shows.

KPMG data in its biannual report on fintech investment trends has shown a sharp drop off from $13.8bn to $5.9bn for H1 in 2022 versus this year.

Despite the big dip for the UK, British fintechs still attracted more funding than their counterparts in the rest of EMEA.

“It wasn’t a surprise to see fintech funding decline in the first six months of 2023, given the enormous headwinds pressuring the market at the moment,” KPMG International global head of financial services Judd Caplain said.

“But the long-term business case for many subsectors within fintech remains very strong — particularly for sectors like payments, insurtech, and wealthtech.”

Caplain added that when market conditions start to even out, funding will “likely rebound”, though not necessarily to the record levels seen in 2021.

The number of fintech deals completed so far this year has also dropped compared to the same period last year.

There were 215 mergers and acquisitions, private equity and venture capital fintech deals made in the first half of the year compared to nearly 400 for the same period last year (392).

Globally, total funding dropped from $63.2bn across 2,885 deals to $52.4bn across 2,153 deals.

“Despite a slowdown in UK fintech investment compared to last year, the UK remains at the centre of European fintech innovation with British fintechs attracting over half the funding of Europe,” KPMG UK client lead partner for banking and fintech John Hallsworth said.