UK fintech funding drops to lowest level in more than a decade

In the first half of 2026, investment in UK financial technology firms reached its lowest level in over a decade, according to a KPMG report citing PitchBook data. The UK saw a significant drop in funding for fintech companies, with £1.8 billion (US$2.5 billion) invested during the period, a nearly two-thirds decrease from the previous year.

Deal count also fell to a ten-year low, with only 205 deals across mergers and acquisitions, private equity, and venture capital completed in the first half of 2026, compared to 281 year-over-year.

The decline in funding coincided with a broader global trend, as investors became more selective and focused on areas with long-term growth potential, particularly artificial intelligence. Despite the overall downturn, AI-related fintechs saw a surge in investment, with £445 million allocated to 79 deals in the first half of 2026, accounting for 25% of total UK fintech investment. This represented a significant increase from 16% in the same period last year.

The UK's share of fintech investment globally also declined, falling to 22% in the first half of 2026 from 68% at the end of 2025. However, the UK still led in deal activity compared to other European countries, ranking second only to the US. Hannah Dobson, KPMG UK's fintech head, attributed the challenging start to the year to the levels of investment being on par with those seen during the pandemic's first wave, but noted the presence of significant demand in AI, where investment is gaining prominence.