The amount of money invested in UK fintechs has fallen by 65% in the first half of 2022, as the global economy slows.
However, the drop is exaggerated given the unprecedented high growth experienced last year.
A total of $9.6bn was invested in UK fintechs in the first six months of this year, compared to $27.8bn for the same period in 2021, according to KPMG’s biennial. The pulse of fintech Report.
During this period, 262 UK mergers and acquisitions, private equity and venture capital fintech deals were completed, compared to 341 in the same six months last year.
KPMG said: “Geopolitical uncertainty, turbulent public markets, ongoing supply chain disruptions, high levels of inflation and rising interest rates have all contributed to lower levels of UK fintech investment compared to record highs in 2021.”
The UK is therefore not unique in reporting a decline in investment, and despite the UK slowdown, five of the 10 largest fintech deals in the Europe Middle East and Africa region were completed in the UK.
Total global fintech funding reached $107.8 billion in the first six months of 2022 with 2,980 deals.
John Holsworth, client lead partner for banking and fintech at KPMG UK, said: “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 France. , Germany, China, Brazil and Canada combined.”
Anton Rudenklau, global fintech leader at KPMG International, said that while 2021 has seen huge investments in fintech, the latest figures look worse than they are.
A KPMG Reported earlier this year UK fintech investment was seven times higher in the full year 2021 than in 2020. It found that UK fintech investment rose from $5.2bn in 2020 to a “staggering” $37.3bn (£27.5bn) last year.
“Excluding results beyond 2021, global fintech investment and interest was quite positive in the first six months of this year,” it said.
“While market uncertainty is expected to continue in the second half, the diversity of the fintech subsector, combined with the diversity of jurisdictions attracting fintech investment, could help keep investment in the space relatively solid in the near term.”
According to Hallsworth, one area of fintech that is on the rise is anti-money laundering technology, as banks seek to comply with sanctions, embargoes and other regulatory measures as the war in Ukraine continues.