NewsUK fintech investment drops by almost double global averageGlobal fintech investments fell 20% compared to 37% in the UK, according to latest Innovate Finance figuresByKarl Flinders,Chief reporter and senior editor EMEAPublished: 10 Jan 2025 11:55 Investment in the UK fintech sector fell by 37% last year compared to 2023, but retained its leadership in Europe and was second place in global terms.The huge fall in investment was put down to tough market conditions which included rising interest rates, geopolitical instability, and a recalibration in venture-capital fund-raising, according to Innovate Finance, the industry body for fintech in the UK.In its latest global report, Innovate Finance revealed that investment in fintech fell globally by 20% to $43.5bn, compared with the 37% drop in the UK where $3.6bn was invested in fintechs.Innovate Finance CEO Janine Hirt was positive but warned against firms not to stop investing in innovation, with an increase in investment expected:The latest figures tell a compelling story of resilience and adaptability. The UKs ability to attract $3.6bn in fintech investment during a year of economic turbulence reflects the strength and dynamism of our ecosystem.However, this is no time for complacency. We know the upswing in investment is coming, and we need to ensure that the UK is at the front of the queue as a destination for venture funding when it doesShe added that the UK fintech industry needs to double down on innovation, market reforms and progressive regulation to ensure the UK retains its leading position.Economic secretary to the Treasury Tulip Siddiq said that around 3,000 firms support tens of thousands of skilled jobs across the country, but added: We cannot rest on our laurels.New growth-focused remits for the regulators will support innovation in the sector, and we will set out further action to maintain the UKs position as a world-leader in fintech when we publish the first-ever Financial Services Growth and Competitiveness Strategy in the spring.One fintech leader, who wished to remain anonymous, said there is money to be invested, but the days when investors would spend money on lots of firms knowing that a couple will pay off big are over. The days in 2021 of prey and spray are over, with investors looking at fewer safer investments.You can see why this approach was used in the past because if you made, say, 20 investments, it was very likely a couple would do very well.Maria Scott is CEO of Tania Technology, part of the regtech subgroup of fintech supplying software that automates regulatory compliance for financial services firms.She agreed that investors have changed their approach, adding: There is definitely money out there and there is a focus of profitability and sustainability among fintechs...[there is currently] huge investment in generative AI, across all sectors.Innovate Finance said major deals, including $621m for fintech bank Monzo, highlighted the sectors ability to attract significant funding despite the downturn, but it also reported that female-led fintechs saw a sharp 78% drop in investment, which it said underscores the need for more inclusive funding practices.According to Innovate Finance, the governments planned Financial Services Growth and Competitiveness strategy will include action on building the UK as a leading centre for blockchain and digital assets, delivering the next phase of Open Banking and clear plans for Open Finance, implementing a joined up and tech-enabled anti-fraud strategy, and developing regulatory culture and capability to support innovation.Read more about fintechIn The Current Issue:What do the home secretarys policing reforms mean for the future of the Police Digital Service?What are the security risks of bring your own AI?Download Current IssueFear the technologists, not the technology? The rise of the tech baron Computer Weekly Editors BlogBeyond Textbooks: why businesses must invest in grassroots stem initiatives WITsendView All Blogs