Investment in the UK FinTech industry dropped 57 per cent to $5.9 billion in the first half of 2023, according to a new report from professional services firm KPMG.

The report said that factors behind the lack of investment include high inflation, rising interest rates and the ongoing conflict between Russia and Ukraine.

There are also challenges in the tech sector which have scared away investors such as the collapse of several banks and a number of depressed valuations.

But the report said that the UK is still an important centre for FinTech investment as British FinTechs attracted more funding than their counterparts in the EMEA region combined.

The UK attracted half of the region’s ten largest deals in the first half of the year including the $3.1 billion buyout of data insights firm Wood Mackenzie by Veritas, a $602 million raise by AI-powered lending company Abound, and a $250 million raise by e-trading platform eToro.

Around 215 FinTech deals, including mergers, acquisitions, and private equity agreements, were completed in the first half of 2023 down from 392 deals in the same period of 2022.

Away from the UK, the Americas saw $6.1 billion in FinTech funding across 1,011 deals in the first half of 2023, while the EMEA region attracted $11.1 billion across 702 deals.

“It wasn’t a surprise to see FinTech funding decline in the first six months of 2023, given the enormous headwinds pressuring the market at the moment,” said Judd Caplain, global head of financial services at KPMG International. “But the long-term business case for many subsectors within fintech remains very strong—particularly for sectors like payments, InsurTech, and WealthTech. Once market conditions begin to even out, funding will likely rebound--if not to the record level experienced in 2021.”

Share Story: