UK FinTech investment drops by over a third in 2023

Investment in the UK FinTech industry dropped from $18.7 billion in 2022 to $12.3 billion in 2023, a fall of 34 per cent.

According to a new report by KPMG, last year’s level of investment is comparable to 2017, when overall spend on the industry reached $11.2 billion.

Despite the drop, FinTechs in Britain are still attracting more funding than those in France, Germany, China, India, Brazil and Canada combined.

The report blamed the fall in investment on geopolitical and economic uncertainty triggered by conflicts in Ukraine and the Middle East, the high interest rate environment, and tight liquidity leading investors to hang on to their cash.

The UK saw the largest FinTech deal in Europe which was the $6.9 billion private equity raise by UK-based Finastra.

However, the number of deals completed in 2023 in the UK fell to 456 compared with 706 in the previous year.

Investment in the EMEA FinTech market also declined to $24.5 billion from $49.6 billion in 2022, the lowest level in seven years.

“The FinTech market has been evolving and maturing since it got its start in 2004 and really came into its own in 2008,” said Karim Haji, global and UK head of financial services at KPMG. “The technology underpinning FinTech keeps changing, and we’re seeing the pace of change accelerate with the application of AI and generative AI.

“You could say that we’re coming into the next wave of FinTech. While the investment numbers are soft now - due to broader market conditions - the next year could be quite exciting for innovation in the FinTech space.”

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