FinTech investment has slumped 57 per cent in the first half of 2023 amid economic uncertainty, but the UK has maintained its position as a leading European financial centre, according to data from KPMG.
During the first six months of this year, total UK fintech investment declined to $5.9 billion (£4.6 billion), a sharp drop from the $13.8 billion recorded during the same period last year, due to rising interest rates, soaring inflation, and geopolitical tensions dampening investor confidence.
This decline has been recognised as part of a global trend, as both the number and value of fintech deals decreased worldwide. In the first half of this year, there were 2,153 fintech deals made globally, amounting to $52.4 billion, compared to 2,885 deals valued at $63.2 billion in the second half of the previous year.
Within the UK, 215 fintech deals were made in the first six months of the year through private equity, venture capital or mergers and acquisitions – nearly half the number compared to the 392 deals executed last year.
Despite this slowdown, British fintechs have continued to attract more funding than their counterparts across the rest of the Europe, the Middle East and Africa.
Dr Yi Ding, Assistant Professor of Information Systems at the Gillmore Centre for Financial Technology, commented: “The UK is a leading hub for FinTech, spearheading innovation across fields such as AI and digital currencies to constantly drive efficiencies and better support businesses and consumers. While it is disappointing to see the extent of the funding decline, it is no surprise to see the UK maintain its place as the leading destination for FinTech.”
“Despite a turbulent economy, it is vital that investors continue to support innovation, particularly at a research level, to ensure the safe development of emerging technologies that can transform businesses and drive economic growth. A collaboration of government, regulators, industry and academia can continue to spearhead world-class research and development, and, with investor support, the UK can harness this innovation to remain the go-to FinTech hub.”