UK FinTech investment ranks second in the world behind the US

UK FinTech investment continues to grow despite the global slowdown following a record-breaking 2021. Investments in FinTech are expected to increase this year. Founders and enthusiasts are optimistic about this year’s FinTech investment.

In the first half of 2022 total capital invested in FinTech globally reached $59 billion  – flat year-on-year. The UK FinTech sector continues to grow with investment reaching $9.1 billion – a 24% year-on-year increase from H1 2021., according to a report by Innovate finance.

UK FinTech investment continues to grow despite the global slowdown following a record-breaking 2021. Investments in FinTech are expected to increase this year. Founders and enthusiasts are optimistic about this year’s FinTech investment.

The year 2022 has proven to be unprecedented so far. According to geopolitics, tectonic shifts in the FinTech investment landscape never occur in a vacuum.

Over 3,046 FinTech deals analysed, $59bn was invested in the first half of 2022 – flat year-over-year. Despite the global slowdown in investments, some notable exceptions have been noted, primarily in the UK. The UK saw a 24% increase in FinTech investments in the first half of 2021, compared to the first half of 2022. UK FinTech grew by 217% YoY last year, but the country remains second in the world for the amount invested, greater than the rest of Europe combined.

Overall, the US received the most investment in the first half of 2022, bringing in $25bn in FinTech capital, with the UK firmly in second place with $9.1bn, rounded off by India ($3.9bn), Germany ($2.4bn) and France ($2.3bn).

With $32.8 billion of investment across 1,754 deals, the first quarter of 2022 showed promising results, up 21% from $27.1 billion across 1,795 deals in Q1 of 2021. In 2022, however, the rumored ‘market correction’ began to emerge. The amount invested in Q2 was $26.3 billion across 1,291 deals, down 19% from $32.5 billion invested across 1,606 deals in Q2 2021. It has been predicted by FinTech enthusiasts and founders that investment activity will slow down and valuations will decline.

Founders and enthusiasts of FinTech have warned about slowing investment activity and declining valuations, and investors have anticipated this. In the first quarter of 2022, $32.8 billion was invested across 1,754 deals, an increase of 21% over Q1 of 2021 when $27.1 billion was invested across 1,795 deals. A rumored’ market correction’ emerged in the second quarter of 2022, however. Capital invested in Q2 2021 was over $32.5 bn across 1,606 deals, a 19% drop from Q2 2022.

After a great year in FinTech investment in 2021, this year has shown marked fluctuations. In major markets like the US, Netherlands, China, and South Korea, growth has slowed, but top hubs like the UK continue to grow. These half-year results might reflect both geopolitical shifts and the wider market corrections seen across many asset classes.

When valuations are lower, platforms may raise smaller amounts of capital, forcing them to increase cash flow from existing businesses. FinTechs may be able to introduce more innovative products in 2022, as well as new ways to operate.