UK fintech investment topped $37.3bn (£27.5bn) in 2021, a sevenfold increase compared to 2020, as dealmaking activity soared.
Britain has emerged as a hub for fintech investment post-Brexit, with over 600 M&A, private equity and venture capital deals finalised in 2021, up by 27 per cent compared to 2020. The investment total was boosted by a string of high value deals, with five of the ten largest fintech deals in the EMEA region completed in the UK, according to KPMG data.
“The UK is a world-leader in fintech, which is good for jobs and the economy,” a spokesperson for the Treasury told City A.M.. “We welcome these figures from KPMG that show how our work to create an environment that supports innovation and attracts investment is paying off.”
Britain was a clear front runner in the European Fintech scene. The EMEA region attracting a total of $77bn in investment last year, with record levels of funding attracted by Germany, which received $5.4bn and in Ireland, which attracted $1.6bn of investment.
“The UK remains at the centre of European fintech investment with British fintechs attracting more funding than their counterparts in the rest of EMEA combined,” said Karim Haji, the UK and EMA head of financial services at KPMG.
“Fintechs remain strategically important for the UK’s economic growth prospects and it is vital that the ongoing work to nurture them continues if the UK is to remain a magnet for investment,” he continued.
Globally, fintech funding across M&A, Private Equity and Venture Capital reached $210bn across a record 5,684 deals last year. Payments continued to attract the most funding, accounting for $51.7bn in investment globally in 2021, with surging interest in areas like ‘buy now, pay later’, embedded banking, and open banking helping to keep the sector “robust” KPMG said.
While the UK’s fintech sector is bouyant, certain payments services have raised red flags with the UK’s financial watchdog which is consulting on new rules for ‘buy now pay later’ schemes.
A recent study revealed that usage of such services has exploded during 2021 with nearly a fifth of UK adults now using payments services offered by the likes of Klarna and Clearpay at least once a month.