UK fintech investment hits four-year low
Fintech investment in the UK had another sluggish year with new data showing it sunk to a four-year low in 2024.
KPMG’s bi-annual fintech report showed UK fintech investment fell by 27 per cent to £7.9bn last year, down from £10.1bn in 2023.
Despite this, the UK managed to scoop up more funding than France, Germany, China, India, Brazil and Canada combined.
The report cited geopolitical uncertainty, high levels of inflation and high interest rates as contributing to the investment decline.
The year marked another step in fintech investment decline after funding skyrocketed in 2021, but has since fizzled out.
Investment decline is ‘no surprise’
Yerbol Orynbayev, former Deputy Prime Minister of Kazakhstan turned fintech firm President, told City PM the UK “cannot afford to sit on its hands” regarding fintech investment.
Orynbayev said: “The decline in investment is no surprise, but – that said – it should be a wake-up call for change.”
He called on the UK to follow suit with the US on looser regulation “particularly with Trump back in office and further deregulation drives coming down the tracks”.
“The onus is now on the FCA to take a step back and unleash UK fintech, or its biggest and best simply won’t get off the ground.”
Hannah Dobson, head of fintech at KPMG UK, said: “2024 was another tough year for fintech investment, which inevitably has led to some business failure and some consolidation,
“It has also sharpened the focus on a path to profit and cost control which positively leads to more sustainable saleable businesses in the longer term.”
Dobson added there were “signs of a slow recovery” but warned of the impact of regulation as an “ongoing challenge” facing fintechs.
“We expect UK investment to remain relatively soft in the first half of this year, although it will likely begin to pick up as interest rates reduce further,” she said.
KPMG’s ‘Pulse of Fintech’ showed global investment in crypto and blockchain had risen to £7.2bn.
This was driven by a bumper second half of the year, where four of the five largest crypto deals occurred in the last six months.
Global and UK head of financial services at KPMG Karim Haji said: “We are starting to see more deals coming through because of interest rate cuts in different jurisdictions and the lower cost of funding.
“However we will have to wait and see if the changing world trading conditions impact inflation, interest rates and consequently these positive signs of market change.”