The UK has attracted more FinTech investment than any other country during the first half of the year, with fundraising worth $16.1 billion (£12.3 billion).

KPMG’s industry report found that China came in second place with $15.1 billion, followed by the US at $14.2 billion. Globally, FinTech investment took in $57.9 billion across 875 deals during the first half – up 34.2 per cent compared to the whole of 2017, which recorded just $38.1 billion overall.

Four of Europe’s top 10 FinTech biggest fundraising deals happened in the UK, including a $250 million by Revolut, $100 million by eToro, $60 million by Flender and $54 million by Moneyfarm.

Giovanni Dapra, chief executive and co-founder of Moneyfarm, told FStech that the deal making is testament to the availability of capital and the regulatory environment in the UK.

"It has the perfect blend of a rich talent pool and the largest financial services hub in the world. While broadly speaking this makeup will not change, it is important to avoid immigration restrictions which could limit FinTech’s access to global and diverse talent.”

"As the market continues to expand we're bound to see some very interesting partnerships, particularly as incumbents look to benefit from the FinTech opportunity," he added.

Despite concerns about a potential hard Brexit in 2019, venture capital investors remained relatively bullish, according to KPMG. It noted that over the last six months, the UK government continued to take “decisive action” to support the FinTech market. Specifically, in March it released its first FinTech Sector Strategy which is expected to help the UK retain European industry leadership.

During the first and second quarters of 2018, investors focused on a broader range of innovative technologies than ever before. At a technology level, interest in artificial intelligence (AI) and robotic process automation continued to gain attention, while InsurTech and RegTech also grew significantly.

In terms of RegTech, 2018 year-to-date funding has already exceeded total annual funding in every year previous, except 2016, with the US and UK attracting the majority of this funding.

KPMG stated that at a technology level, RegTech investments have been quite varied, from a $25 million raise by UK-based CloudPay - a payments processing platform compliant with specific regulations - to $38 million raised across two funding rounds by US-based Harbor - a blockchain-based compliance platform that tokenizes private securities for trading.

RegTech investment is still relatively immature though, with approximately half of total funding raised by seed and early stage companies. “Over the next 12 to 24 months, we expect to see investment in RegTech to grow rapidly — particularly in areas like AI, know your customer and know your data,” the report added.

Meanwhile, in mature FinTech areas like payments and lending, there will likely be a significant amount of consolidation over the next six to 12 months, as the largest platforms become bigger and others fail to achieve scale.

Simon Wax, partner at accountancy firm Buzzacott, said that uncertainty around Brexit and how it will impact the UK’s access to the digital single market, the availability of skilled technical workers and research and development are all key risks for small businesses.

“Scaling FinTech companies need to focus their efforts on long-term success, not being the biggest money maker,” he continued. “The risk is companies may lose sight of what they originally set out to do, a trap in which young companies can easily fall into, when not careful.”

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