UK fintech funding crashes to 5-year low as investment plunges 21% – but it’s still beating France, Germany, and China combined
The UK fintech sector, long regarded as Europe’s undisputed leader, faced a stark reality check in 2025. Investment plunged 21% to $10.96 billion, marking the lowest level since the depths of the Covid-19 pandemic in 2020.
According to KPMG’s latest Pulse of Fintech report, released this week, the drop from $13.35 billion in 2024 reflects broader headwinds including geopolitical tensions, persistent high interest rates, and heightened investor scrutiny that has made backers more cautious about pouring capital into the space.
Deal volume also contracted sharply, falling to 418 transactions from 527 the previous year, underscoring a more selective environment where fewer but potentially larger bets are being placed.
The best place for fintech in Europe
Yet amid the downturn, the UK’s dominance remains unchallenged. The country pulled in more fintech funding than France, Germany, Belgium, the Nordics, Ireland, China, and Brazil combined, a striking testament to London’s enduring appeal as the continent’s fintech capital.
The UK captured over a third of total EMEA (Europe, Middle East, and Africa) fintech investment, which edged up marginally to $29.2 billion for the year.
A massive bright spot was the $3 billion fundraising round by UK-based neobank Revolut in November 2025, the largest fintech deal in Europe that year and a clear signal that blockbuster opportunities still exist for proven players.
Quality over quantity
Globally, fintech showed signs of recovery after three straight years of declines, with total investment rebounding to $116 billion in 2025 from $95.5 billion in 2024. However, deal numbers hit their lowest annual level since 2017, highlighting a shift toward quality over quantity.
“While 2025 presented ongoing challenges, the UK continues to stand out as Europe’s fintech hub, attracting over a third of total EMEA funding. Encouragingly, we are beginning to see momentum return as regulatory clarity improves and market conditions stabilise,” said Hannah Dobson, Partner and UK Head of Fintech at KPMG UK.
To hold onto its crown, Dobson added that the UK must remain an investor-friendly location, a place where innovation and entrepreneurship can thrive and be supported.
This was echoed by Karim Haji, Global and UK Head of Financial Services at KPMG, who noted that the focus on quality is only set to increase.
“Looking ahead to 2026, the fintech sector is entering a more balanced phase, one defined by selective growth, clearer paths to profitability, and improving liquidity. While macroeconomic and geopolitical risks remain, the combination of stronger exit markets, greater regulatory clarity, and accelerating innovation provides a constructive foundation for sustained investment and long-term value creation.”
