After years of market downturn investment into UK fintech has seen an increase for the first half of 2024 from the same period the year prior.
According to KPMG’s ‘Pulse of Fintech’ report, total UK fintech investment stands at $7.3bn for H1′ 2024, a 192% increase from the $2.5bn total amount for the same period in 2023.
This figure was significantly strengthened by the $4bn deal that saw IRIS Software Group bought out by Leonard Green. The funding round for the deal saw $999m accumulated, also backed by $621m raised by UK neobank Monzo.
In total, from January to July this year, 198 UK M&A fintech deals were completed as the UK remains Europe’s leading fintech investment hub, attracting more funding than all European, African and Middle Eastern markets combined.
However, the total number of M&A deals decreased from last year, where the first-half of 2023 saw 284 deals secured.
KPMG also notes that if it were not for substantial deals such as the IRIS Software Group one, then UK fintech investment for H1’ 2024 would stand at $1.8bn.
Exceptions aside, the H1’ 2024 investment figures indicate encouragement throughout the UK fintech sector that the market is recovering from a few years of downturn, hampered by global economy uncertainty, high inflation and interest rates.
Furthermore, both inflation (2%) and interest rates (5%) have now fallen to their intended targets as the new Labour government will look to continue the work made by the Conservative Party’s efforts of preserving and growing the UK fintech sector as one of the country’s primary economic growth drivers.
Hannah Dobson, UK Head of Fintech at KPMG UK, said: “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.”
Outside of the UK, the Europe, Middle East and Africa (EMEA) total fintech investment figures for H1’ 2024 stood at $11.4bn, a 67% decrease from the $19.1bn invested in H2’ 2023. The largest EMEA deal outside of the UK was the sale of Banco BPM Gruppo for $652m, as well as the acquisition of Pagero to Thomson Reuters.
