UK fintech investment hits four-year low, but remains the European leader
2024 proved to be another challenging year for the global fintech market. In the UK, fintech investment fell by more than a quarter in 2024, dropping from £10.95 billion in 2023 to £7.97 billion in 2024. UK fintech investment in 2024 was at its lowest level since 2020.
Geopolitical uncertainty, high levels of inflation and the higher interest rate environment all contributed to more subdued levels of UK fintech investment, compared to the record highs in 2021. However, the UK still attracted more funding than France, Germany, China, India, Brazil and Canada combined. The largest deal in the UK was the £215M venture funding round by money transfer provider Zepz in H2’24.
"2024 was another tough year for fintech investment, In EMEA, and particularly the UK, there are signs of a slow recovery in deals as the reduction in interest rates and more political stability leads to better certainty. The impact of regulation is an ongoing challenge for fintechs across EMEA as they face into new EU and UK regimes in areas such as AI and BNPL. Despite the drop in investment, the UK remained the capital of European fintech in 2024, attracting almost half the entire funding of the EMEA region. 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, with common consensus that this will be in Q3/Q4."
Key insights from the EMEA region
Total fintech investment in the EMEA region fell from £21.5 billion in 2023 to £16.3 billion in 2024. H2’24 was particularly weak, with just £5.8 billion in investment compared to £10.5 billion in H1’24. However, within EMEA, strong businesses — ones turning a profit, or with proven business models and a strong growth trajectory — continued to attract investment in H2’24. Interestingly, the Middle East saw fintech investment swell from £0.9 billion to £1.7 billion year-over year.
Given the dry exit environment over the last two years, there has been a growing number of secondary transactions as fintechs have reached profitability. This has been driven by long-standing investors wanting to liquidate some of their position and by companies looking to reward their early employees. Given the challenges facing the UK’s capital markets in particular, secondary transactions could remain quite robust in 2025.
The evolving regulatory regimes in both the EU and the UK have made it challenging for startups, scaling fintechs, and other market participants, potentially driving them to focus more on compliance than on other activities. During H2’24, both the AI Act and the Markets in Crypto Assets (MiCA) regulation came into force in the EU.
"While global fintech funding dipped in 2024, it’s encouraging to see bright spots in some areas of investment. Payments continued to be the rockstar of the fintech subsectors, driven by late-stage deals and an increasing focus on consolidation, and regtech gained a lot of traction. As we’re starting to see more deals coming through because of interest rate cuts in different jurisdictions and the lower cost of funding, the future is looking more promising for fintechs globally."
2024 key global highlights
Total global fintech funding reached a seven-year low of £76 billion in 2024, down from £91.8 billion in 2023. The Americas saw the largest share of global investment, attracting £51.5 billion across 2,267 deals. Comparatively, the EMEA region attracted £16.3 billion across 1,465 deals, while the ASPAC region attracted £9.2 billion across 895 deals.
Global M&A activity fell to £40 billion in 2024, down from £48.6 billion in 2023, as large M&A transactions remained in short supply.
The payments space continued to account for the largest share of funding among the fintech subsectors, with global investment in the payments space hitting £25 billion in 2024, up from £13.8 billion in 2023. This was followed by investment in crypto and blockchain, which rose from £7 billion in 2023 to £7.3 billion in 2024 globally, with four of the five largest crypto deals of 2024 occurring in H2’24.
Despite global fintech investment declining between H1’24 and H2’24, the quarterly results provided a sense of positivity heading into 2025, with global investment growing from £14.5 billion in Q3’24 to £21 billion in Q4’24. Looking back over the second half of 2024, we can see how the sentiment of fintech investors shifted from cautious to cautiously optimistic. We are anticipating that this will continue into 2025.
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