Last year saw global fintech investment fall 20%, raising $43.5 billion (£35.4 billion) across 6,464 deals, according to the latest analysis from UK industry body, Innovate Finance.

However, the new figures, released as part of Innovate Finance’s FinTech Investment Landscape 2024 report, shows that despite a global slowdown, the UK attracted $3.6 billion (£2.9 bn) across 576 deals last year – ranking second worldwide and first in Europe for fintech funding. 

According to the study, rising interest rates, geopolitical instability, and a recalibration in VC fund-raising led to tighter funding environments in key markets, despite which the UK secured more capital than the next five European countries combined.

France raised $1.1 billion (£894m) from 127 deals, followed by Germany with $0.9 billion (£731.5m) from 149 deals, with smaller markets like Switzerland (£406.3m) and the Netherlands (£325.1m) rounding out Europe’s top five investment markets.

The United States, on the other hand, continued to dominate the sector, raising $22 billion (£17.8bn) across 2,633 deals, making up around half of total global investment, although still 13% down from the figures recorded in 2023.

Globally, India and Singapore maintained 3rd and 4th positions in the rankings despite declines of between 35-50% in investments, though the report mentions that other nations, including Brazil and Canada saw their fintech investments increasing year-on-year.   

“The UK maintained its position as the fintech capital of Europe in 2024, with around 3,000 firms supporting tens of thousands of skilled jobs across the country. But we cannot rest on our laurels,” said Tulip Siddiq, economic secretary to the Treasury.

“New growth-focused remits for the regulators will support innovation in the sector, and we will set out further action to maintain the UK’s position as a world-leader in fintech when we publish the first-ever Financial Services Growth and Competitiveness Strategy in the Spring.”

Major funding rounds helped maintain the UK fintech market, including £504 million for Monzo and £217 million for Zepz, however the data shows that fintech investment in H2 2024 was 28% lower than H1 2024, having fallen since the investment peak of H1 2022.

Added to that, the report highlights that female-led fintechs saw a sharp 78% drop in investment, raising £97.5 million across 71 deals, accounting for just 3% of the total invested in UK fintech last year, with the top deal raising just over £20 million for Abound, the personal lending firm.  

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Janine Hirt, CEO of Innovate Finance, said: “The UK’s ability to attract $3.6 billion 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 when it does, the UK is at the front of the queue as a destination for VC funding. 

“To remain a global leader, we need to double down on innovation, market reforms and progressive regulation, ensuring we are prepared to capitalise on the next phase of growth and stay ahead in an ever more competitive world.”