Fintech investment has been declining since 2012, but there are signs of a potential recovery in the second half of this year.
According to KPMG, UK fintech investment dropped by over a quarter last year, but there are indications of a turnaround. In 2024, UK firms received $9.9bn, while total investment in 2024 was $20.3bn compared to $27.6bn the previous year.
The total UK fintech investment decreased to $9.9bn in 2024, a 27% decrease from $13.6bn in 2023, as per KPMG’s Pulse of fintech report.
Hannah Dobson, partner and UK head of fintech at KPMG, mentioned that UK investment is expected to remain soft in the first half of this year, but it is likely to pick up as interest rates decrease further in the third and fourth quarters.
Chris Skinner, CEO at The Finanser, noted that the fintech industry is facing challenges, with investments decreasing in recent years. The impact of geopolitical uncertainty, inflation, and higher interest rates has contributed to subdued levels of UK fintech investment.
KPMG’s report highlighted that 2024 was a tough year for fintech investment, leading to business failures and consolidation. The focus on profitability and cost control is expected to result in more sustainable businesses in the long term.
Despite the challenges, there are signs of a slow recovery in EMEA, especially in the UK, as interest rates decrease and political stability improves. However, regulatory challenges remain as fintechs adapt to new EU and UK regimes.
Global fintech investment hit a seven-year low in 2024, with $95bn invested compared to $113.7bn in 2023. Karim Haji, global and UK head of financial services at KPMG, noted some bright spots in the industry, such as the growth of payments and regtech.
Global investment
Global investment in the payments space reached $31bn in 2024, up from $17.2bn in 2023. Haji mentioned that more deals are emerging due to interest rate cuts and lower funding costs, but the impact of changing world trading conditions on inflation and market dynamics remains uncertain.
KPMG’s findings align with those of Innovative Finance, which reported a 37% decrease in investment in 2024 compared to 2023. Innovate Finance attributed this decline to tough market conditions, including rising interest rates and geopolitical instability.
