Investment into the UK’s fintech sector has jumped ahead of 2021 levels this year despite recessionary fears beginning to drag on funding in the second quarter, new figures have revealed.
Capital injected into UK fintech firms between January and March hit $5.4bn (£4.51m) – up from $4.1m last year – but a cocktail of recessionary fears sparked a slowdown to $3.7bn in the second quarter, according to figures from fintech industry body Innovate Finance.
Overall funding for UK fintech firms in the six months to June rose to $9.1bn (£7.61bn) across 294 deals in the UK, compared to $7.3bn across 375 deals in the first half of 2021.
Innovate Finance said a “market correction” from April became apparent as venture capital cash began to dry up amid rising interest rates, but boss Janine Hirt remained bullish for the year ahead, describing the elevated levels of funding as “testament to the strength of our ecosystem”.
“It is critical that we now keep up this momentum. The UK is currently receiving more investment in FinTech than all of Europe, second only in the world to the US,” 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.”
The elevated funding levels for UK fintech bucked a global slowdown as total capital invested into fintech globally reached $59bn in the first half of the year – flat year-on-year compared to 2021.
Investment levels placed the UK second globally for fintech investment, behind only the US which notched $25bn in the first half of the year.
Venture capital investment globally is expected to continue to fall in the second half of this year however, as rising interest rates put an end to the cheap cash that has fuelled an investment frenzy for the past decade.