Global fintech investment fell 20 per cent to $43.5billion across 6,464 deals in 2024 according to the industry body representing UK fintech, Innovate Finance. Nonetheless, amid the global challenges faced by changing economies and politics, the UK has retained its second place globally in terms of investment.
The UK secured more capital than the next five European countries combined last year, attracting £3.6billion in fintech investment. Despite rising interest rates, geopolitical instability and a recalibration in venture-capital fund-raising led to tighter funding environments in key markets, the US retained its top spot as most invested market, raising $22billion, according to Innovate Finance. With the UK coming in second place, India came third with $2.2billion and Singapore fourth with $1.4billion.
In Europe, the UK dominated with $3.6billion across 576 deals. France raised $1.1billion from 127 deals – returning into the global top 10 – followed by Germany with $0.9billion from 149 deals. Smaller markets like Switzerland ($0.5billion) and the Netherlands ($0.4billion) also contributed to the total funding seen across the continent.
Janine Hirt, CEO of Innovate Finance said: “The latest figures tell a compelling story of resilience and adaptability. The UK’s ability to attract $3.6billion in fintech investment during a year of economic turbulence reflects the strength and dynamism of our ecosystem. However, this is no time for complacency. We know the upswing in investment is coming, and we need to ensure that when it does, the UK is at the front of the queue as a destination for VC funding.
“To remain a global leader, we need to double down on innovation, market reforms and progressive regulation, ensuring we are prepared to capitalise on the next phase of growth and stay ahead in an ever more competitive world.”
An uphill battle for investment
The UK’s $3.6billion in investment marked a 37 per cent decline from 2023, although it did demonstrate the sector’s resilience in the face of economic uncertainty. Major deals, including $621million for Monzo and $267million for Zepz, highlighted the sector’s ability to attract significant funding despite the downturn.
However, female-led fintechs saw a sharp 78 per cent drop in investment, raising just $120million across 71 deals, underscoring the need for more inclusive funding practices.
Fintech investment typically moves in parallel with the broader VC investment markets, which itself has been experiencing a cyclical downturn over the last few years. However, 2024 saw an increase in broader VC investment versus 2023, and globally fintech investment in H2 2024 was slightly up on H1 2024. These may be the first green shoots of recovery as we enter 2025.
As the global fintech sector prepares for its next growth phase, the UK has an opportunity to strengthen its position as a destination for capital and talent, while addressing areas like inclusivity and regulatory competitiveness.
Preparing for the next investment upswing
Innovate Finance is advocating for bold action to ensure the UK’s readiness for the next investment upswing.
The UK Government has made good progress since July 2024: on Mansion House reforms of investment markets, a National Payments Vision, legislating for smart data and digital ID, and directing regulators to streamline regulation and support growth and competitiveness.
With the US seeing resurgent market confidence and a pro-innovator stance by the new administration, the UK now needs greater ambition and greater pace of reform.
The Government’s forthcoming Financial Services Growth and Competitiveness strategy provides an opportunity to go further and faster as the leading centre for financial technology and innovation, including ambitious aims and rapid action on:
- Building the UK as a leading centre for blockchain and digital assets – Delivering the next phase of Open Banking and clear plans for Open Finance
- Implementing a joined up and tech-enabled anti-fraud strategy – Developing regulatory culture and capability to support innovation
Tulip Siddiq, Economic Secretary to the Treasury said: “The UK maintained its position as the FinTech capital of Europe in 2024, with around 3,000 firms supporting tens of thousands of skilled jobs across the country. But we cannot rest on our laurels.
“New growth-focused remits for the regulators will support innovation in the sector, and we will set out further action to maintain the UK’s position as a world-leader in fintech when we publish the first-ever Financial Services Growth and Competitiveness Strategy in the Spring.”
The post Still Striving for Top Spot: Innovate Finance Says UK Needs Greater Ambition and Pace of Reform appeared first on The Fintech Times.
