The UK has emerged as a dominant player in European fintech, securing over half of the continent’s venture funding in the first half of 2025. This comes in the wake of a challenging period for the sector, as highlighted in a recent report by Finch Capital.
In total, European fintech companies attracted €3.6 billion in investments during this timeframe, marking a 23% increase compared to the same period in the previous year. However, this figure is significantly lower than the €15.3 billion raised in the first half of 2022. Despite this decline, fintech’s role within the European funding landscape has grown, now accounting for 23% of all funding in the region, up from 18% in H1 2024.
Specifically, the UK captured 56% of the total funding, with London dominating as the primary hub, claiming 79% of that share. The UK’s fintech landscape is characterized by its diversity and scale, with its leading two deals accounting for less than 50% of total funding—a distinction not shared by other European markets.
London’s success can largely be attributed to homegrown fintech powerhouses such as Monzo and Revolut, complemented by a robust payments ecosystem, according to Finch Capital. In contrast, countries like Germany and France often rely on a handful of substantial deals in sectors like AI-driven compliance, wealth management, and capital markets analytics. Notably, while Germany’s median deal value has surged by 189% year-on-year, its total deal count of 27 is lower than France’s 38.
AI-focused startups and scale-ups made up 21% of all deals in European fintech, a rise from 16% in 2024, though they represented just 7% of the total deal value in H1 2025.
An analysis of research and development teams reveals a concerning trend: growth in engineering teams has considerably slowed since 2022. The increase in net new hires among top fintech firms dropped from 20% in 2022 to an anticipated 2% by the end of 2025. This trend reflects a shift towards optimizing existing technologies rather than developing new models from scratch.
Aman Ghei, a partner at Finch Capital, notes that firms currently lack the resources to create proprietary models. Instead, they are adapting existing technologies to suit their needs. “Replacing front-end engineers, the highest demand is for prompt engineers—those who work with language models to maximize output,” he explains. “This shift means that fewer engineers are needed for growth, allowing companies to focus their efforts strategically.”