Investments in the fintech sector dropped to $9.6 billion in the first six months of 2022 from $27.8 billion in the same period of the previous year, the latest KPMG report revealed.
However, there was a drastic surge in fintech investments in the country that peaked last year. Despite a yearly decline of more than 65 percent, investments in the industry are now back to pre-pandemic levels. It still remains higher than the $3.5 billion injected into the UK fintech sector in H1 2019.
“The fintech market experienced a massive year globally in 2021, which makes it look like investment has somewhat fallen off a cliff so far in 2022. That really isn’t the case. We’ve simply shifted back to levels seen in 2019 and 2020,” Anton Ruddenklau, KPMG International’s global fintech leader, said.
Macroeconomic Conditions
The report, called Pulse of Fintech, outlined that the investments this year were affected by several macroeconomic reasons like geopolitical tensions in east Europe, supply chain disruption, troubles with inflation, and the central bank’s move to increase market rates.
Further, the public markets witnessed turbulence, and the market capitalization of several technology-driven companies was slashed.
“Despite a slowdown in UK fintech investment compared to last year, the UK remains at the center of European fintech innovation with British fintechs attracting more funding than those in France, Germany, China, Brazil and Canada combined,” KPMG UK’s client lead partner for banking and fintech, John Hallsworth said.
Indeed, the situation was grimmer in the Americas and EMEA region as investments and deal volumes went down in both markets.
Globally, total fintech funding in the period reached $107.8 billion, closing 2,980 deals across mergers and acquisitions, private equities and venture capital. Payments remained the investors' favorite as the sector took in $43.6 billion in investment in H1 2022 compared to $60.3 billion for the entire of 2021.
Regtech is another sector that showed resilience against the industry-wide trend and $5.6 billion in investment with 157 deals.
