UK fintech investment drops by over 50% in 2022 #

As a result of higher interest rates, inflation, and downward pressure on valuations the investors’ support for fintech reduced by more than 50% according to KPMG’s Pulse of Fintech.

In 2021, the UK fintech investment amounted to $39.1 billion and in 2022 the digit dropped to $17.4 billion. The number of fintech deals reduced as well from 724 in 2021 to 593 in 2022. However, the UK isn’t the only fintech hub going through an investment decline with total global fintech investment falling to $164.1 billion compared to $238.9 billion it made last year.

This year, the strongest area of fintech investment is payment with only $4 billion drop. Regtech is also worth noting as it is the only fintech sector that omitted the downward trend of investment, rising to $18.6 billion in 2022 compared to $11.8 in 2021.

Crypto and blockchain and turning down, seen as unstable. The investments in those sectors falter to $23.1 billion which is by $7 billion less than in 2021.

According to the KPMG’s Pulse of Fintech, there’s a high possibility for fintech investment to remain subdued in 2023. The most resilient segment of fintech will most likely remain regtech and B2B solutions within fintech verticals.

Anton Ruddenklau, Global Head of Financial Services Innovation and Fintech, KPMG International commented on the situation, “With interest rates still rising, valuations are going to remain quite tricky for some time. This will likely keep a lot of the biggest potential M&A transactions on the shelf as investors wait to see if prices come down even further. That said, M&A activity will likely increase for smaller size deals as corporates and larger fintechs look to buy fintech capabilities at good value.”