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

The United Kingdom has witnessed a significant decline in its regional dominance within the global financial technology sector, with investment in its fintech firms reaching its lowest level in over a decade during the first half of 2026. According to a KPMG report referencing PitchBook data, UK fintechs attracted £1.8 billion (US$2.5 billion) in investment during this period, marking a near two-thirds decrease from the previous year.

The number of deals, totaling 205 across various investment methods, also hit a ten-year low, compared to 281 in the same period a year earlier. The decline in funding and deal count follows a surge in investment following the Covid-19 pandemic, as consumers turned to digital banking and online shopping. However, the slowdown is more pronounced in the UK compared to the global trend, where fintech investment grew to £75.8 billion in the first half of 2026, up from £37.1 billion in the same period the previous year.

Despite this, the UK remains a significant player, accounting for 22% of all fintech investment across Europe, the Middle East, and Africa, a drop from 68% at the end of 2025. UK fintechs investing in artificial intelligence saw a notable increase, with £445 million invested in 79 deals, representing 25% of the total UK fintech investment, up from 16% in the same period last year.

Hannah Dobson, KPMG UK's fintech head, noted that while the start of 2026 has been challenging, with investment levels akin to those during the pandemic's initial wave, there are pockets of strong demand, especially in AI, where investment remains prominent even as the broader market softens.