Investment in UK fintech fell to £1.8bn in the first half of 2026, its lowest level in a decade, as investors concentrated capital into fewer transactions despite continued demand for businesses using AI.
Figures from KPMG UK show total investment dropping by around two-thirds from £5bn in the same period last year. Deal numbers also fell, from 281 transactions in the first half of 2025 to 205 across mergers and acquisitions, private equity, and venture capital.
KPMG said both investment value and deal count were at their lowest since its Pulse of Fintech report began tracking the UK market in 2016. The investment total puts the first six months of 2026 broadly in line with the first half of 2020, when the pandemic disrupted financing and transaction activity.
The UK retained its position as Europe’s largest fintech investment market and remained the biggest market across Europe, the Middle East, and Africa. Its share of EMEA investment has nevertheless contracted sharply, falling to 22% in the first half of 2026 compared with 68% at the end of last year.
Capital was heavily concentrated in a small number of larger transactions. Ebury secured £543m of private equity investment, Paymentology received £129m, and financial data company 9fin raised £124m.
Hannah Dobson, head of fintech and partner at KPMG UK, said: “Investors are continuing to back areas where they see long-term structural growth.”
Fintech associated with AI was one of the clearest exceptions to the wider slowdown. Investment in the category reached £445m across 79 UK transactions during the first six months of the year, compared with £382m across 67 deals a year earlier. Businesses in the category accounted for 25% of total UK fintech investment, up from 16%.
The UK also maintained a sizeable European lead in that segment. KPMG recorded £244m of AI fintech investment in France and £134m in Germany over the same period.
Cybersecurity fintech funding reached £90m across seven UK deals and represented around 5% of overall fintech investment. KPMG’s technology categories are non-exclusive, meaning individual transactions can be classified in more than one area and the vertical figures should not be combined into a separate total.
The domestic decline contrasts with higher headline investment globally. KPMG recorded £75.8bn of worldwide fintech investment in the first half of 2026, up from £53.1bn in the second half of 2025 and £37.1bn in the first half of last year.
That capital was highly concentrated geographically. The Americas attracted more than 80% of global fintech investment, including £59.4bn across 933 transactions in the US. EMEA attracted £8.3bn across 626 deals, putting the region on course for a decade low in both value and deal volume if the first half pace continues.
The combination of higher global investment and fewer transactions suggests investors are favouring larger and more established propositions. Fintech businesses with proven revenues, defensible technology, opportunities for international expansion, or a role in industry consolidation can still attract substantial backing, while less differentiated businesses face a tighter market.
The shift has consequences beyond fundraising rounds themselves. Venture capital finances product development, hiring, regulatory work, and market expansion, while acquisitions and private equity transactions provide routes for founders and investors to realise value. Lower transaction volumes can therefore affect the broader ecosystem of advisers, technology suppliers, recruiters, and professional services around the sector.
The UK retains considerable advantages through its financial services industry, technology workforce, regulatory expertise, and established startup community. Its continued European lead shows that capital remains available, but the first half figures indicate that maintaining that position will depend increasingly on whether UK fintech companies can compete for a smaller number of larger and more selective investment decisions.
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