Investment in UK financial technology (fintech) firms dropped by two-thirds in the first six months of this year, hitting its lowest level for 10 years.
According to KPMG’s latest Pulse of Fintech report, investment was £1.8bn in the period compared to £5bn during the same half year in 2025. There were 205 deals in the UK during the period, a fall from 281 last year. This is the lowest level recorded in the survey since it began in 2016, when £735m in UK fintech investment was reported.
While the UK is still the recipient of the most investment funds across the EMEA region, it only accounted for 22% of the total, compared to 68% at the end of last year. The huge decline is not likely to be the end of the story, with the second half of the year expected to continue in the same vein.
Hannah Dobson, head of fintech at KPMG UK, said: “While there are bright spots, the geopolitical and economic headwinds facing firms only stand to intensify as the year continues and the second half of the year is likely to remain challenging for fundraising.”
According to recent research by data intelligence platform Tracxn Technologies last month, London accounted for 94% of the fintech funding in the UK during the first half of 2026, compared with 99% in the second six months of 2025.
One “bright spot” for fintech was an increase in artificial intelligence (AI-)related fintech investment, with £445m invested in 79 deals in the first half of this year, in comparison to £382m invested in 67 deals last year. AI-related investment accounted for 25% of the total over the past six months.
Cyber security investment also grew during the reported period, with deals related to the technology worth £90m compared to £40,000 last year. Last year, Germany was the destination of most cyber security fintech investment, but the UK overtook it this year.
Dobson said it has been a challenging start to 2026, with levels of investment on a par with those seen during the first wave of the pandemic: “That said, there are pockets of significant demand, particularly in AI, where investment is gaining prominence even as the wider market has softened.”
She added: “Investors are continuing to back areas where they see long-term structural growth, even as capital deployment becomes more selective. Cyber security investment also increased year on year, with a clear overlap with AI as the whole sector navigates the age of frontier AI models and the opportunities and threats these create for businesses.”
According to KPMG, the Americas region attracted more than 80% of global fintech investment, with £63.8bn spend across 1,120 deals. Out of this, the US accounted for £59.4bn and 933 deals.
Karim Haji, UK and global head of financial services at KPMG, said the broader fintech market is gaining momentum: “AI is driving new opportunities, corporates are becoming more active and private equity is looking at consolidation plays. Even smaller startups are attracting attention when they bring something truly differentiated to the table. Together, these trends point to a positive long-term outlook for the fintech sector.”
