UK investment in the FinTech sector has hit a new record, with nearly £ 18 billion in transactions in the first half of this year, placing the UK second in the world behind the US.
London’s Square Mile continued to dominate the European fintech sector, attracting investors from around the world who have purchased more than 280 of the UK’s most advanced digital financial firms.
The buying frenzy came despite the government’s failure to strike a Brexit deal with Brussels that would give the City equivalence with financial firms operating within the EU’s single market.
According to the Pulse of Fintech report by consultancy firm KPMG, a semi-annual report on trends in fintech investment, the UK has secured investments of $ 24.5 billion (£ 17.7 billion), just behind the United States, which reached $ 42.1 billion and more than four times the $ 5.9 billion of investment seen in the United Kingdom in 2020.
KPMG said the UK total benefited from a one-time increase thanks to the London Stock Exchange’s $ 14.8 billion purchase of financial data provider and rival Bloomberg Refinitiv, but the new record UK’s 283 deals were far higher than anywhere outside the US.
Venture capital firms, which focus on buying small start-ups, have been particularly active with fintech-focused investments in the UK, reaching $ 6.2 billion, more than double the second semester 2020 level.
Fintech companies seek to improve and automate the delivery and use of financial services, although the definition is viewed by many in the financial services industry as fuzzy as most companies operate through websites and digital platforms. for at least some of their activities.
London is home to 3,018 FinTech companies, more than any other city in the world, according to a survey.
In June, Tractable, which works with auto insurance companies to allow users to take and submit photos of damaged cars that are then used to substantiate claims, raised $ 60 million, valuing the company at 1 billion pounds sterling.
Fintech valuations have remained high despite the pandemic, KPMG said, and the number of £ 1bn companies created reached 163 globally in the first half of the year.
Global investments in FinTechs rose from $ 87.1 billion in the second half of 2020 to a record high of $ 98 billion in the first half of 2021.
Karim Haji, EMA and UK Financial Services Manager at KPMG, said: “UK fintechs have attracted significantly more funding than their counterparts in the rest of the EMEA region combined.
“Covid-19 has sparked a digital race in UK financial services and many big banks have tapped into their investment pots for digitization – a major reason we are seeing so much corporate investment.
“This moment, along with the UK’s reputation as a historic financial services industry and the ongoing work to nurture fintechs, from testing to listing, makes the UK a magnet for investment. “
Ian Pollari, Global Co-Head of Fintech at KPMG, said: “Global fintech investments have grown from $ 87.1 billion in the second half of 2020 to a record high of $ 98 billion in the first half of 2021.
“Big fundraising rounds, high valuations and successful exits underscore the thesis that digital customer engagement that accelerated during the pandemic is here to stay.”
Pollari said: “Global investment in FinTechs reached an all-time high in the first half of 2021, with investors, especially businesses and venture capitalists, making big bets on market leaders in many areas. jurisdictions and in almost all sub-sectors.
“Big fundraising rounds, high valuations and successful exits underscore the thesis that digital customer engagement that accelerated during the pandemic is here to stay. “