The primary half of 2022 noticed a 65% discount within the amount of cash invested in UK fintechs as the worldwide economic system slows.
Nevertheless, the drop is exaggerated as a result of unprecedented excessive development skilled final yr.
A complete of $9.6bn was invested in UK fintechs within the first six months of this yr, in contrast with $27.8bn for a similar interval in 2021, in keeping with KPMG’s biannual Pulse of fintech report.
Throughout the interval, 262 UK merger and acquisition, personal fairness and enterprise capital fintech offers have been accomplished, in contrast with 341 in the identical six months final yr.
KPMG stated: “Geopolitical uncertainty, turbulent public markets, ongoing provide chain disruption, excessive ranges of inflation and rising rates of interest have all contributed to extra subdued ranges of UK fintech funding in contrast with the document highs skilled in 2021.”
The UK is due to this fact not distinctive in reporting falling funding, and regardless of the UK slowdown, 5 out of the ten largest fintech offers within the Europe Center East and Africa area have been accomplished within the UK.
Complete world fintech funding reached $107.8bn, with 2,980 offers within the first six months of 2022.
John Hallsworth, consumer lead accomplice for banking and fintech at KPMG UK, stated: “Regardless of a slowdown in UK fintech funding in contrast with final yr, the UK stays on the centre of European fintech innovation, with British fintechs attracting extra funding than these in France, Germany, China, Brazil and Canada mixed.”
Anton Ruddenklau, world fintech chief at KPMG Worldwide, stated that as a result of 2021 noticed big funding in fintech, the newest figures look worse than they’re.
A KPMG report earlier this year revealed Funding in UK fintechs was seven instances increased within the full yr 2021 than in 2020. It discovered that UK fintech funding elevated from $5.2bn in 2020 to a “staggering” $37.3bn (£27.5bn) final yr.
“Taking out 2021’s outlier outcomes, world fintech funding and curiosity was fairly optimistic within the first six months of this yr,” it stated.
“Whereas the uncertainty permeating the market is predicted to proceed into the second half, the range of fintech subsectors, mixed with the range of jurisdictions attracting fintech investments, may assist preserve funding within the house comparatively strong over the near-term.”
In keeping with Hallsworth, one space of fintech that’s on the up is anti-money laundering expertise, as banks search to adjust to sanctions, embargoes and different regulatory measures as conflict continues in Ukraine.