Total UK fintech investment dropped to $9.9billion in 2024, down 27 per cent from $13.6billion in 2023, according to the latest report by KPMG. However, after analysing global fintech investment last year, there are plenty of reasons to remain optimistic, says the accounting giant.
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 seen in 2021. In fact, UK fintech investment in 2024 was at its lowest level since 2020 ($7.6billion), according to the Pulse of Fintech report from KPMG.
“2024 was another tough year for fintech investment, which inevitably has led to some business failure and some consolidation,” explained Hannah Dobson, partner and UK head of fintech at KPMG UK. “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 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.”
Analysing global trends
The initial signs also paint a dim picture when looking at global fintech investment. KPMG revealed that total global fintech funding reached a seven-year low of $95billion in 2024 down from $113.7billion in 2023. Meanwhile, global fintech investment fell from $51.7billion in H1 2024 to $43.9billion in H2 2024.
However, the quarterly results provide a sense of positivity heading into 2025, with investment growing from $18.0billion in Q3 2024 to $25.9 billion in Q4 2024.
A similar trend occurred in both the Americas and EMEA regions; the Americas saw $31billion in fintech investment in H2 2024 — of which $20.2billion came in Q4 2024, while EMEA attracted $7.2billion in H2 2024 — of which $4billion came in Q4 2024.
Overall, the Americas saw the largest share of global investment, attracting $63.8billion across 2,267 deals, including $50. billion across 1,836 deals in the US. Comparatively, the EMEA region attracted $20.3billion across 1,465 deals, while the ASPAC region attracted $11.4billion across 895 deals.
The payments space continued to account for the largest share of funding among the fintech subsectors, with global investment in the payments space hitting $31billion in 2024, up from $17.2billion in 2023.
Karim Haji, global and UK head of financial services at KPMG, also 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.”
Staying optimistic
Global M&A activity also fell to $49.6billion in 2024, down from $60.2billion in 2023 as large M&A transactions remained in short supply. However, global investment in crypto and blockchain rose from $8.7billion in 2023 to $9.1billion in 2024; while four of the five largest crypto deals of 2024 occurred in H2 2024.
Looking at what 2025 holds in store, AI is expected to remain a key priority for investors, with regtech and cybersecurity-related solutions likely to see the most interest in H1 2025.
Anton Ruddenklau, lead of global innovation and fintech, financial services at KPMG International, added: “If what we’ve seen in the broader investment space is any indication, AI could be a sleeping giant for fintech investment. However, right now, it’s still very early days.
“There’s definitely a lot of interest in AI, generative AI, agentic AI and automation, but there’s a lot of caution too. Over the next year, AI-focused regtechs will likely see the most traction among investors as financial services companies look for better ways to respond to the increasingly complex regulatory environment.”
