UK fintech funding experienced an eight percent decline last year but still outperformed competing hubs in Europe and Asia amid a significant global slowdown, according to recent data from Innovate Finance.
The challenges of rising interest rates, escalating inflation, and the ramifications of the war in Ukraine marked the end of a decade-long surge in global venture capital investment. The UK fintech sector attracted approximately $12.5 billion in 2022, a decrease from the previous year’s $13.5 billion.
London-based firms received the majority of this investment, totaling $10.2 billion in 2022, which represents only a five percent decline from 2021, even as global funding sharply decreased. The contraction in UK funding was notably less severe than the global average, which saw total investment plummet nearly a third to $92 billion, with the number of investment deals worldwide dropping from 6,146 to 5,263.
Janine Hirt, CEO of Innovate Finance, remarked that UK fintechs continue to secure significant investment levels despite challenging economic circumstances, highlighting the resilience of the sector. She noted that the UK still attracts more fintech investment than the next 10 European countries combined and ranks second globally, only behind the US. Hirt emphasized the need for collaboration among industry, government, and regulators to sustain this momentum and reinforce the UK’s position as a global fintech hub.
Khalid Talukder, co-founder of London fintech firm DKK Partners, commented that London’s fintech sector has demonstrated remarkable resilience and ambition in the face of economic hurdles. He expressed optimism for a quick recovery in 2023, stating that fintech firms have a crucial role to play in driving growth, creating jobs, and helping businesses maximize their potential.