Priya PatelTotal UK fintech investment in 2023 dropped by 34% compared to the previous year, according to a report from KPMG. The report cited geopolitical and economic uncertainties, conflicts in Ukraine and the Middle East, high interest rates, and tight liquidity as factors that caused fintech investors to hold onto their cash. Despite the decrease in investment, the UK remains the capital of European fintech innovation, attracting more funding than France, Germany, China, India, Brazil, and Canada combined.
The report also highlighted that total global fintech funding across M&A, PE, and VC reached a six-year low of $113.7 billion in 2023, down from $196.6 billion in 2022. The payments space accounted for the largest share of fintech funding, despite a drop from $57.9 billion to $20.7 billion between 2022 and 2023. Only proptech and insurtech saw an increase in total investment year-over-year.
KPMG predicts that investment in the UK fintech sector will remain relatively soft in the first half of 2024 but will likely pick up as interest rates decrease in the third or fourth quarter. KPMG also noted that while the investment numbers are currently soft, the next year could be exciting for innovation in the fintech space, especially with the rapid advancements in AI and generative AI technology.
