UK fintech outperforms global sector

The UK fintech sector experienced a significant increase in investment in the first six months of this year, while the amount of capital being put into the global sector remained flat.

Investment in UK fintechs increased by 24% to $9.1bn in the first half of 2022, compared with the same period last year, according to the latest figures from Innovate Finance.

In contrast, for the whole of 2021, investment was up by 207% compared with 2020, reaching $11.6bn, according to Innovate Finance figures published in January.

Only the US received more fintech investment than the UK, gaining $25bn in fintech capital in the first half of this year. India saw $3.9bn invested in fintechs, with Germany at $2.4bn and France at $2.3bn. 

Janine Hirt, CEO at Innovate Finance, said UK fintechs are continuing to secure outstanding levels of investment. “This is a testament to the strength of our ecosystem, including our innovative entrepreneurs and founders, strong and diverse talent pool, and a supportive government and regulatory framework,” she said.

“We must continue to work together – industry, government and regulators – to build on this leadership and ensure the UK remains the best place in the world to start, build and scale a fintech business,” said Hirt. “This will positively impact not only the financial services sector but the entire population of the UK as a whole, who will benefit from new, innovative and more effective products that drive greater financial wellness.”

Meanwhile, total capital invested in fintech globally reached $59bn during the period which was flat year-on-year.

Venture capitalist Kevin Chong, co-head at Outward VC, said recovery will be slow. “Inflation takes time to fix, [so we can expect] it to take a good two years for things to go back to ‘normal’,” he said.

“Venture capitalists are being more choosy and more concentrated. There is [simply] less appetite for growth at all costs than in the past few years.”

But Jay Wilson, investment director at AlbionVC, which invests in fintechs, said: “This [fintech venture] is the ultimate market of opportunity. There are still great companies that need funding out there, and now is the time to potentially unlock a deal.”