Fintech investment in the UK falls amid global turmoil
The first half of 2022 saw a 65% reduction in the amount of money invested in UK fintechs as the global economy slows.
However, the drop is exaggerated due to the unprecedented high growth we experienced last year.
A total of $9.6 billion was invested in UK fintechs in the first six months of this year, compared to $27.8 billion for the same period in 2021, according to KPMG’s semi-annual Pulse of fintech report.
During the period, 262 UK M&A, private equity and venture capital fintech deals were completed, compared with 341 in the same half last year.
KPMG said: “Geopolitical uncertainty, turbulent public markets, ongoing supply chain disruptions, high levels of inflation and rising interest rates have all contributed to more subdued levels of UK fintech investment compared to the record highs experienced in 2021.”
The UK is therefore not unique in reporting declining investment, and despite the UK decline, five of the 10 largest fintech deals in the EMEA region were completed in the UK.
Total global fintech funding reached $107.8 billion, with 2,980 deals in the first six months of 2022.
John Hallsworth, client lead partner for banking and fintech at KPMG UK, said: “Despite a decline in UK fintech investment compared to last year, the UK remains at the center of European fintech innovation, with UK fintechs attracting more funding than the in France, Germany, China, Brazil and Canada combined.”
Anton Ruddenklau, global fintech leader at KPMG International, said that because 2021 saw major investment in fintech, the latest numbers look worse than they are.
A KPMG report earlier this year revealed that investment in UK fintechs was seven times higher in the whole of 2021 than in 2020. It found UK fintech investment increased from $5.2 billion in 2020 to a “simmering” $37.3 billion ( 27.5 billion pounds) last year.
“Taking out 2021’s outliers, global fintech investment and interest was quite positive in the first six months of this year,” it said.
“While the uncertainty permeating the market is expected to continue into the second half of the year, the diversity of fintech sub-sectors, combined with the diversity of jurisdictions attracting fintech investment, could help keep investment in the area relatively solid in the near term.”
According to Hallsworth, one area of fintech that is on the rise is anti-money laundering technology, as banks try to comply with sanctions, embargoes and other regulatory measures as the war in Ukraine continues.
