UK FinTech Funding Drops to Lowest Level in Decade

U.K. FinTech investments have reached a 10-year low amid an overall jump in funding.

British financial technology firms took in around $2.5 billion during the first six months of 2026, a two-thirds decline from the previous year, according to the latest edition of KPMG’s Pulse of Fintech report, published Monday (Aug. 24).

“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,” said Hannah Dobson, KPMG partner and the group’s U.K. FinTech lead.

“That said, there are pockets of significant demand, particularly in AI, where investment is gaining prominence even as the wider market has softened.”

Although the U.K. holds the top position for FinTech investment for Europe – as well as the larger European, Middle East and Africa (EMEA) region – its prominence has faded, the report said. The country accounted for 22% of all EMEA investment during the first half of this year, down from 68% at the end of 2025.

The number of deals also fell to its lowest level since 2016, the report added. Between mergers and acquisitions, private equity and venture capital, there were 205 U.K. FinTech deals during the first half of 2026, versus 281 in the first half of 2025.

“Yet, when it comes to deal activity, the U.K. still sits second only to the U.S. globally and exceeds all other European countries combined,” KPMG said.

Among the largest deals during the first half of this year is the $175 million private equity investment issuer-processor Paymentology announced in May, designed to fund the company’s expansion, product development and hiring.

While overall FinTech funding has declined, investments in AI-related FinTechs are on the rise, KPMG said. Investments in those companies came to $606 million across 79 deals for the first six months of 2026, accounting for 25% of total U.K. FinTech investments.

The same period in 2025 saw investments of $520 million across 67 deals, which made up 16% of all FinTech investment.

Meanwhile, global FinTech investment has grown substantially since the first half of 2025, the report added, from around $50 billion to $102 billion billion over an 18 month stretch.

“While much of today’s investment is focused on the largest and highest-quality deals, the broader FinTech market is gaining momentum,” said Karim Haji, KPMG’s U.K. and global head of financial services.

“AI is driving new opportunities, corporates are becoming more active, and private equity is looking at consolidation plays. Even smaller startups are attracting attention when they bring something truly differentiated to the table. Together, these trends point to a positive long-term outlook for the FinTech sector.”