UK fintech funding plummets by more than 25%

UK fintech fundraising fell by more than a quarter in the first half of 2026, according to professional services firm S&W.

The firm said the UK still comfortably leads Europe for fintech investment, but the gap with the rest of the continent continues to narrow.

S&W made the comments at a panel session with leaders from UK fintech unicorns, including Starling, Zopa, Clearbank, Marshmallow and Zilch.

“Even through uncertain times, there remains an energy and optimism in the UK where fintech shows that it pushes harder than anywhere else,” said Sophie Long, Business Consulting Partner at S&W.

“Fintech really has been at the forefront of that innovation,” said Long.

The panel included:

• Charles McManus (Co-founder and former CEO of Clearbank and co-chair of the Unicorn Council)
• Emma Alley (Group Chief Financial Officer at insurance fintech Marshmallow)
• Adnan Ahmed (Group Director of Strategy and Corporate Development at Starling)
• Ryan Mendy (Co-founder of the Unicorn Council and strategic adviser to the CEO at Zilch)
• Steve Hulme (Chief Financial Officer at Zopa)

Mendy said the tougher funding environment means fintechs now need hard numbers to back their decisions.

“The winners today are effectively combining ambition with evidence: real economics, real unit economics, real growth, real compliance,” said Mendy.

Speed and big bets

Starling was a retail bank in 2019 when it had an opportunity to secure grant money to start serving small businesses.

“If we were too slow or too big to turn and pivot to those opportunities, we would have missed the most profitable segment that we could have got into,” said Ahmed.

Zopa has been lending since 2005 but only launched as a bank in 2020, a move that required significant investment from the company.

“Without taking those risks, we would not have been the business that we are today,” said Hulme.

“We would have been a lot smaller, and our investors might have had fewer grey hairs along the way, but we wouldn’t have created the value that we’ve created,” he added.

Hulme said the pace of a fast-growing fintech also raises the chance of getting things wrong.

“When you’re running at that pace, the risk of just making a bad decision is very high,” said Hulme.

“You should evaluate the importance of the decision and the ability to back away from it. Then check and probably get input from a second pair of eyes,” he added.

Alley said fintechs that grow quickly often overlook the basics.

“In any regulated space, in any fintech business or insurtech, you have to have that rigour to be able to scale and scale safely,” said Alley.

Clearbank turned away from Ireland

McManus said Clearbank had to learn to turn customers away as it built a sustainable business.

“As a new bank, we wanted to say yes to everyone, but building a sustainable business, we had to say no,” said McManus.

Clearbank first targeted Ireland for international expansion in 2018, but the Central Bank of Ireland blocked the move by demanding the bank be cloud agnostic.

The bank expanded into the Netherlands through Amsterdam instead.

“We stopped, came back, built the UK stronger, and when we went again, it was Amsterdam, and a brilliant decision,” said McManus.

McManus said his main concern as CEO was keeping payments running for customers.

“If you want to build for scale, then you really have to invest for it,” said McManus.

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