The UK has long been a hot center of innovation in financial services. The noted Fintech hub has boosted the UK economy while helping the country maintain its status as a top global financial center. The sagging global economy, commencing with the COVID health crisis, has harmed all nations, but in regard to Fintech investment, it appears the UK is bouncing back from lows.
A report shared by KPMG says that UK Fintech investment almost tripled during the first half of 2024 when compared to the first 6 months of 2023. For H1 2024, there has been $7.3 billion invested in Fintechs, up from $2.5 billion in the same period in 2023.
KPMG shares:
- There have been 198 UK M&A, PE, and VC Fintech deals completed in H1 2024, down from 284 in H1 2023
- UK saw the largest Fintech-focused VC deal of H1’24—a $999 million raise by Abound. Several large funding rounds helped to boost the sector.
- There has been a challenging first half of the year for the Fintech market globally, with total global Fintech investment reaching $51.9 billion across 2,255 deals in H1’24 down from $62.3 billion across 2,287 deals in H2’23
The report adds that while numbers are improving, challenges like inflation, geopolitical strife, etc., have tempered UK Fintech investment – especially when compared to the highs of 2021.
KMPG declares the UK as the center of European Fintech investment, with British Fintechs attracting more funding than their counterparts in the rest of EMEA [Europe, Middle East, and Africa] combined.
The EMEA region saw a significant drop in Fintech investment, falling from $19.1 billion in H2 2023 to $11.4 billion in H1 2024.
The largest EMEA deals outside of the UK included the $652 million buyout of payments firm Banco BPM Gruppo and Thomson Reuters’s acquisition of Switzerland-based e-invoicing company Pagero.
Hannah Dobson, Partner and UK Head of Fintech at KPMG UK, commented on the report:
“With the new UK government in situ and the potential long awaited drop in interest rates having finally arrived, there are hopes that Fintech investment will start to show signs of recovery as we move into the latter part of the year and early 2025. We are expecting to see growing investment interest in AI and its use in the fintech and regtech space. Regulation remains a key focus in the EU – particularly with crypto and digital asset businesses as they navigate the new EU’s Markets in Crypto Assets (MiCA) regulation, which is expected to arrive in December 2024.”
Other key highlights include:
- In the Americas, total investment fell from $38.5 billion to $36.7 billion between H2’23 and H1’24—including from $35 billion to $27.4 billion in the US— while in EMEA it fell from $19.1 billion to $11.4 billion, and in ASPAC it dropped from $4.6 billion to $3.7 billion.
- Fintech deal volume in the Americas rose from 1,066 to 1,123 deals between H2’23 and H1’24—including from 866 to 916 deal in the US—while it rose from 406 to 438 deals in ASPAC; deal volume dropped in the EMEA region from 804 to 689 deals.
- Global M&A deal value was $32.6 billion across 264 deals globally in H1’24. The Americas attracted $26.8 billion across 130 deals, EMEA attracted $5.5 billion across 102 deals, and ASPAC attracted $310 million across 31 deals.
- Global VC investment was $18.3 billion in H1’24, of which the Americas saw $9.3 billion—including $7.6 billion in the US—EMEA saw $5.4 billion, and ASPAC saw $3.4 billion.
- Global PE investment was just $979.5 million in H1’24. The US accounted for all $568.9 million in PE investment in the Americas, while EMEA saw $402.8 million, and ASPAC saw just $7.8 million.
- Corporate CVC investment accounted for $8.5 billion in VC investment in H1’24, including $4.4 billion in the Americas ($3.6 in the US), $2.23 billion in the EMEA region, and $1.7 billion in ASPAC.