UK fintech funding drops to lowest level in at least a decade: KPMG
The slowdown is in contrast with fintech investment volumes globally which increased to £75.8 billion in the first half of 2026
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INVESTMENT in UK financial technology firms fell to the lowest level since at least 2016 in the first half of this year, as funders flock to companies tied to artificial intelligence and can show long-term growth.
Fintechs in the UK received £1.8 billion (US$2.5 billion) of investment during the period, down nearly two-thirds from a year ago, according to a KPMG report citing PitchBook data.
Deal count also fell to its lowest in a decade, with 205 deals across mergers and acquisitions, private equity and venture capital completed in the first half, compared with 281 year-over-year.
Funding for financial technology ballooned after the Covid-19 pandemic as customers moved to digital banking and shopping online but has since dropped off globally. Investors have also become more eager to gain exposure to top-tier artificial intelligence companies.
“It has been a challenging start to 2026, with levels of investment on a par with those seen during the first wave of the pandemic,” Hannah Dobson, KPMG UK’s fintech head, said in a statement. “That said, there are pockets of significant demand, particularly in AI, where investment is gaining prominence even as the wider market has softened.”
Investors are becoming more selective in terms of where they’re placing their money, but choosing to back areas they see as having long-term growth opportunities, according to Dobson.
The slowdown in the UK stands in contrast with fintech investment volumes globally, which grew to £75.8 billion in the first half of 2026 from £37.1 billion in the same period last year, according to the KPMG report.
Britain, where financial technology is often heralded as a key plank of the country’s post-Brexit economy, is seeing its dominance in the region decline.
The country represented 22 per cent of all fintech investment across Europe, the Middle East and Africa in the first half of the year, compared with 68 per cent at the end of 2025.
Still, UK deal activity exceeds all other European countries combined, and is second only to the US.
Funding for AI-related fintechs climbed to £445 million across 79 deals in the first half of the year, representing 25 per cent of total UK fintech investment. That’s up from 16 per cent in the same period last year. BLOOMBERG
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