The UK FinTech funding sector maintained its position as the second-largest globally in 2024, trailing only the US. However, despite securing $4.9 billion in investments, the industry experienced a five-year funding low, marking a 2% decline from 2023 and a staggering 57% drop from 2022.
A Tracxn report attributes this downturn to several factors, including tighter regulations, inflationary pressures, and rising interest rates. The evolving digital asset and payment compliance landscape has also created uncertainty among investors, leading to more cautious funding decisions.
FinTech Sector’s 2024 Performance
Last year, the fintech sector secured $4.9 billion across 327 funding rounds, which included:
- 142 Series A rounds
- 114 first-time funded companies
- 20 new soon-to-be unicorns
- One new unicorn – Moniepoint ($110M Series C at a $1B valuation)
- 87 acquisitions and two IPOs (Marex and Diasoft)
While late-stage funding saw a 13% drop compared to 2023, early-stage investments increased by 19%, highlighting a shift towards startups with high-growth potential.
Experts Weigh In on Funding Trends
According to Ryta Zasiekina, Founder of CONCRYT, economic uncertainty has slowed fintech investments. She also pointed to UK government policies, particularly earlier plans to restrict startup investment, which were later reversed.
“In order to sustain fintech growth, policymakers should encourage greater female participation in the industry rather than introducing policies that might limit funding,” Zasiekina added.
Lynda Clarke, COO at Tribe Payments, noted that the boom in venture capital (VC) funding from 2020-2021—fueled by low interest rates and digital acceleration—has led to a market correction in 2024. Investors are now prioritising profitability and sustainability over rapid expansion.
Meanwhile, Teo Blidarus, CEO of FintechOS, highlighted that investment trends are shifting towards AI-driven financial solutions. “While fintech funding declined overall, the integration of AI in regtech, banking-as-a-service (BaaS), and insurtech is sparking fresh investor interest,” he said.
Regulatory and Policy Support Driving UK FinTech Growth
Despite funding challenges, the UK government continues to support fintech innovation through regulatory reforms and strategic initiatives.
Key policies include:
- The Financial Conduct Authority (FCA) Regulatory Sandbox
- The Global Financial Innovation Network (GFIN)
- The Open Banking framework
- The AI Sector Deal
These initiatives create an investment-friendly environment, ensuring the UK remains a global fintech leader. Phil McGriskin, CEO of Vitesse, emphasised that the UK’s balanced approach to regulation and innovation has been crucial in maintaining investor confidence.
London’s Dominance and the Rise of AI in FinTech
London continues to dominate UK fintech investments, attracting 94% of total funding (£4.5B). The city now ranks as the third-largest fintech hub globally, behind San Francisco and the Bay Area.
Looking ahead, AI and blockchain are expected to shape the future of fintech. Joris Lochy, Product Manager at Intix, believes AI-driven innovations such as invisible payments, conversational banking, and real-time financial optimisation will fuel fintech’s next growth phase.
Meanwhile, Sanjeev Jeyakumar, CEO of Lenkie, sees AI-powered alternative credit scoring as a game-changer. Using real-time behavioural and transactional data, fintech firms can offer financial services to previously underserved markets, increasing financial inclusion.
Future of UK FinTech Investment
Despite current challenges, fintech experts remain optimistic about long-term growth. Zasiekina predicts further adoption of digital wallets and contactless payments, particularly in emerging markets.
As the UK fintech industry adapts to changing market conditions, investors will likely focus on high-growth areas such as AI, blockchain, and alternative lending. With continued policy support and technological innovation, the sector is poised for a strong recovery in the coming years.
