Total fintech investment in the UK reached $7.3 billion in the first half of 2024. This is a significant increase from $2.5 billion in the same period of 2023. The data comes from KPMG’s latest Pulse of Fintech report, released today (Tuesday) August 2024.

Despite this increase, the investment climate remains cautious. Geopolitical uncertainties, high inflation, and elevated interest rates have led to more subdued levels of investment compared to the record highs of 2021.

Major Deals Inflate Figures

A major factor in the H1 2024 total was the size of several large deals. Notable transactions included Leonard Green’s $4 billion buyout of financial software company IRIS Software Group, a $999 million venture capital round for the small business marketplace platform Abound, and a $621 million funding raise by neobank Monzo. Excluding these large deals, UK fintech investment would have been $1.8 billion.

In the first half of 2024, there were 198 M&A, private equity, and venture capital deals in the UK fintech sector. This is a decrease from 284 deals in the same period of 2023.

Despite this drop, the UK continues to lead European fintech investment. UK fintech companies attracted more funding than those in the rest of Europe, the Middle East, and Africa (EMEA) combined.

Hannah Dobson, Partner and UK Head of Fintech at KPMG UK, said: “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,” she added, “particularly with crypto and digital asset businesses as they navigate the new EU’s Markets in Crypto Assets regulation, which is expected to arrive in December 2024.”

EMEA Deals Drop Sharply

The overall fintech investment in the EMEA region fell significantly in H1 2024, dropping from $19.1 billion in the second half of 2023 to $11.4 billion.

The largest fintech deals in EMEA, outside of the UK, included the $652 million buyout of payments firm Banco BPM Gruppo and the acquisition of the Swiss e-invoicing company Pagero by Thomson Reuters.