Fintech funding has been on a downward spiral since 2012, however the second half of this yr might see the primary shoots of restoration.
Funding in UK fintechs fell by over 1 / 4 final yr, however there are indicators {that a} restoration might be on its manner, in line with KPMG.
In its newest report into EMEA fintech funding traits, KPMG revealed that 2024 noticed UK companies obtain $9.9bn (£7.8bn). In the meantime, whole funding in 2024 was $20.3bn in contrast with $27.6bn the earlier yr.
Whole UK fintech funding dropped to $9.9bn in 2024, down 27% from $13.6bn in 2023, in line with KPMG’s Pulse of fintech report.
Hannah Dobson, accomplice and UK head of fintech at KPMG, stated UK funding is anticipated to stay “comparatively gentle” within the first half of this yr, however added that “it can probably start to choose up as rates of interest scale back additional, with widespread consensus that this will probably be within the third and fourth quarters”.
Fintech business professional Chris Skinner, CEO at The Finanser, informed Laptop Weekly that “occasions are onerous within the fintech area”. “Fintechs had an incredible trip within the 2010s, however within the 2020s, it appears not,” he stated. “Fintech took a hammering in 2023, with investing down 48% in contrast with 2022, which was additionally a nasty yr, and now we transfer into 2025 and mirror on 2024, the place it went down much more.”
In its report, KPMG stated geopolitical uncertainty, excessive ranges of inflation and the upper rates of interest all contributed to “extra subdued ranges of UK fintech funding”.
Dobson at KPMG added: “2024 was one other powerful yr for fintech funding, which inevitably has led to some enterprise failure and a few consolidation. It has additionally sharpened the deal with a path to revenue and price management which positively results in extra sustainable saleable companies in the long run.”
In EMEA, and notably the UK, there are indicators of a gradual restoration in offers because the discount in rates of interest and extra political stability results in higher certainty. The influence of regulation is an ongoing problem for fintechs throughout EMEA as they face into new EU and UK regimes in areas resembling AI and BNPL.
The biggest fintech deal in Europe in 2024 was the $560.6m sale of on-line financial institution Knab, to Austrian monetary agency Bawag Group. The biggest deal within the UK was the $267m enterprise funding spherical by cash switch supplier Zepz.
It’s not simply Europe that noticed a fall in funding. Globally, fintech hit a seven-year low final yr, with $95bn invested in contrast with $113.7bn in 2023.
Karim Haji, international and UK head of economic companies at KPMG, stated there are some “brilliant spots”.
“Funds continued to be the rockstar of the fintech subsectors, pushed by late-stage offers and an rising deal with consolidation, and regtech gained quite a lot of traction,” stated Haji.
International funding
International funding within the funds area hit $31bn in 2024, up from $17.2bn in 2023.
Haji added that whereas extra offers are starting to come back by way of due to rate of interest cuts in several jurisdictions and the decrease price of funding, the impacts of fixing world buying and selling situations on inflation, rates of interest and the market change are but to be identified.
KPMG’s figures mirror these printed by Progressive Finance final month, which reported a 37% fall in funding in 2024 in contrast with 2023.
Innovate Finance, the business physique for fintech within the UK, blamed powerful market situations that included “rising rates of interest, geopolitical instability, in addition to a recalibration in enterprise capital fundraising”.
