Investment in the UK’s fintech sector has nearly tripled in the first half of 2024, despite a global decline.
Several major deals, including a $4bn buyout of financial software company IRIS Software Group and a $999m VC round by the small business-focused marketplace platform Abound, helped the UK retain its title as the centre of European fintech funding.
Despite a decrease in the number of M&A, private equity, and venture capital fintech deals completed in H1 2024 compared to H1 2023, British fintechs attracted more funding than their counterparts in the rest of EMEA combined, according to figures from professional services firm KPMG.
Total UK fintech investment reached $7.3bn (£5.7bn) over the six months, up from $2.5bn (£2bn) during the same period in 2023.
Despite the almost threefold increase, geopolitical uncertainty, elevated inflation, and higher interest rates have dampened investor confidence compared to the record highs experienced in 2021, according to data from the Big Four firm.
However, the UK seems to be doing better than the rest of the world. The global fintech sector has experienced a notable decline in investment, with total funding dropping from $62.3bn in the second half of 2023 to $51.9bn in the first half of 2024.
Hannah Dobson, partner and UK head of fintech at KPMG UK, said: “With the new UK government in place and the potential long-awaited drop in interest rates finally arriving, there are hopes that fintech investment will start to show signs of recovery as we move into the latter part of the year and early 2025.
“We expect to see growing investment interest in AI and its use in the fintech and regtech space. Regulation remains a key focus in the EU, particularly with crypto and digital asset businesses as they navigate the new EU Markets in Crypto Assets (MiCA) regulation, which is expected to arrive in December 2024.”
In the first quarter of 2024, fintech retook the top spot for tech funding after being overtaken by climate tech last year.
