UK fintech investment hits four-year low, but remains European leader

• UK fintech investment fell by more than a quarter in 2024, but still attracted more funding than those in France, Germany, China, India, Brazil and Canada combined.
• Total fintech investment in EMEA dropped to an eight-year low in 2024 and was down to $20.3 billion from $27.6 billion in 2023.
• The largest fintech deal in Europe in 2024 was the $560.6M sale of online bank, Knab, to Austrian financial firm Bawag Group. The largest deal in the UK was the $267M venture funding round by money transfer provider Zepz.

Total UK fintech investment dropped to $9.9 billion in 2024, down 27% from $13.6 billion in 2023, according to KPMG’s Pulse of Fintech, a bi-annual report on fintech investment trends.

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. UK fintech investment in 2024 was at its lowest level since 2020 ($7.6 billion).

Hannah Dobson, Partner and UK Head of Fintech at KPMG UK, said:

“2024 was another tough year for fintech investment, which inevitably has led to some business failure and some consolidation. It has also sharpened the focus on a path to profit and cost control which positively leads to more sustainable saleable businesses in the longer term.

“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.”

Total global fintech funding reached a seven-year low of US$95 billion in 2024 down from US$113.7 billion in 2023. The payments space continued to account for the largest share of funding among the fintech subsectors, with global investment in the payments space hitting $31 billion in 2024, up from $17.2 billion in 2023.

Karim Haji, Global and UK Head of Financial Services at KPMG, added: “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. We are starting to see more deals coming through because of interest rate cuts in different jurisdictions and the lower cost of funding. However, we will have to wait and see if the changing world trading conditions impact inflation, interest rates and consequently these positive signs of market change”

2024 key global highlights

• The Americas saw the largest share global investment, attracting $63.8 billion across 2,267 deals, including $50.7 billion across 1,836 deals in the US. Comparatively, the EMEA region attracted $20.3 billion across 1,465 deals, while the ASPAC region attracted $11.4 billion across 895 deals.
• Global M&A activity fell to $49.6 billion in 2024, down from $60.2 billion in 2023 as large M&A transactions remained in short supply.
• While global fintech investment fell from $51.7 billion in H1’24 to $43.9 billion in H2’24, the quarterly results provided a sense of positivity heading into 2025, with investment growing from $18.0 billion in Q3’24 to $25.9 billion in Q4’24. A similar trend occurred in both the Americas and EMEA regions; the Americas saw $31 billion in fintech investment in H2’24 — of which $20.2 billion came in Q4’24, while EMEA attracted $7.2 billion in H2’24 — of which $4 billion came in Q4’24.
• Global investment in crypto and blockchain rose from $8.7 billion in 2023 to $9.1 billion in 2024; four of the five largest crypto deals of 2024 occurred in H2’24.

UK fintech investment hit a four-year low in 2024 (see graph below)