The UK has seen a near year-on-year tripling of fintech investment to $7.3bn in the first half of 2024, amid a global downturn in fintech investment. The figures, published by accountancy firm KPMG, show the UK fintech sector seeing signs of recovery, compared to the giddy heights of 2021.
The figures reveal that global fintech investment fell 17 per cent to $51.9bn in the first half of the year, compared to $62.3 billion in the second half of 2023. Across the EMEA (Europe, Middle East, and Africa) elections in the EU and France and a high interest rate environment triggered a 40 per cent fall in fintech funding.
Amid the global downturn, the UK remains at the top of European fintech investment, with British fintechs attracting more funding than their counterparts in the rest of EMEA combined.
Despite the nearly threefold increase in UK fintech investment, geopolitical uncertainty, high levels of inflation and the high interest rate environment have all contributed to more subdued levels of UK fintech investment, compared to the record highs experienced in 2021, KPMG said.
UK fintech investment in the first half of 2024 was bolstered by the size of some of the deals.
These included the $4 billion buyout of financial software company IRIS Software Group by private equity firm Leonard Green, a $999 million VC round by small business-focused marketplace platform Abound, and a $621 million raise by challenger bank Monzo.
KPMG said taking out the big deals, UK fintech investment fell to $1.8bn in the first half of 2024.
In total there were 198 UK M&A, PE and VC fintech deals were completed in the first half of 2024, down from 284 in the first half of 2023.
In the Americas, total investment fell from $38.5bn to $36.7bn between the second half of 2023 and the first half of 2024, including falling from $35bn to $27.4bn in the US.
Hannah Dobson, partner and UK head of fintech, KPMG UK, said:
“With the new UK government in situ and the potential long awaited drop in interest rates having finally arrived, 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 are expecting 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’s Markets in Crypto Assets (MiCA) regulation, which is expected to arrive in December 2024.”
IMAGE: PEXELS