In the first half of 2025, the fintech sector in the UK generated $7.2 billion, reflecting a 5% decrease from the $7.6 billion raised during the same timeframe last year. This data, compiled in a report by KPMG, illustrates the industry’s struggle with ongoing macroeconomic challenges and geopolitical uncertainties that have diminished investor interest since the peak periods of 2021.
Despite the aggregate decline, UK fintech companies executed 216 deals, a slight increase from 198 transactions recorded in the first half of 2024. However, a closer look at the quarterly figures reveals a stark contrast: the first quarter recorded a healthy $5.2 billion across 125 deals, whereas the second quarter saw a significant drop to just $2 billion across 91 transactions.
Significant transactions have contributed to the overall funding figures, including a major $3.1 billion acquisition by a prominent investment firm of a private markets data provider, which played a crucial role in bolstering the totals. Other notable funding rounds include $500 million each for both a cross-border payments company and a wealth management technology platform.
UK fintech investment continues to surpass that of the entire regions of Europe, the Middle East, and Africa combined. While those areas have faced challenges, overall investment in EMEA increased from $11.1 billion in the latter half of 2024 to $13.7 billion in the first half of 2025.
An industry expert noted the resilience of the UK fintech sector amid a challenging economic background, emphasizing that despite the slight decline in investment, the sector remains strong. According to a separate report from a recruitment firm and an analytics company, job growth in the UK fintech sector is predicted to rise by 32%, largely driven by the need for compliance and cybersecurity professionals.
The overall investment landscape has reflected a climate of investor caution, a trend observed across financial markets. Rising geopolitical tensions, market volatility, and general concerns about global economic growth have contributed to this subdued investment atmosphere. Current funding levels are notably lower than the historic peaks seen during the pandemic era in 2021, showcasing a stark drop in second-quarter performance and suggesting a more conservative approach from investors.
Looking forward, a notable development to track is the partnership between the UK’s financial regulatory authority and a well-known technology company, intended to create a regulatory sandbox. This initiative will enable banks to experiment with advanced computing and AI software for testing purposes prior to broader implementation, representing a significant step in fintech innovation.
Globally, the UK’s slight decline fits into a larger context of decreasing global fintech funding, which reached $44.7 billion across over 2,200 deals in the first half of the year—the slowest pace since 2020. While venture capital funding has remained relatively stable, activity in mergers and acquisitions dropped sharply, along with private equity investment.
The Americas continue to lead in overall fintech investment, collecting $27 billion, despite a notable decrease from $35.7 billion the previous year. Asia-Pacific experienced an even more substantial decline, plummeting from $7.3 billion to $3.9 billion.
Certain sectors within fintech, however, have maintained robust activity. Cryptocurrency firms attracted $8.3 billion, nearing the total raised in all of 2024, while artificial intelligence-focused fintech ventures secured $7.2 billion. Regulatory technology also appears to be thriving, suggesting that while the market as a whole may be cooling, specific subsectors are displaying remarkable resilience.
Overall, while the UK fintech sector is faring better than many of its global counterparts, the significant variability in quarterly funding figures underscores that economic and geopolitical pressures continue to exert pressure on investor confidence and the industry’s growth trajectory in the coming months.