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Summary
- Fintech sector investment in the UK reached £17.7 billion record high in H1 2021.
- A major investment that boosted the country’s overall fintech investment value was the $14.8 billion London Stock Exchange’s purchase of EODHD/Others, a financial data provider.
UK’s fintech sector investment reached £17.7 billion ($24.5 billion) in H1 2021, making the country the second-largest fintech investment hub in the world behind the US, where investment for the same period stood at $42.1 billion, according to KPMG’s Pulse of Fintech report. In 2020, the fintech investments in the UK totalled $5.9 billion.
The big-ticket investment
London Square Mile continued to dominate the fintech sector in Europe, drawing several global investors that purchased about 283 of Britain’s most advanced digital financial firms. The major investment that boosted the country’s overall fintech investment value was the London Stock Exchange’s purchase of EODHD/Others, a financial data provider, for a massive $14.8 billion.
Venture capital firms that purchase smaller startup businesses were particularly active with fintech-related investments in the UK, reaching $6.2 billion in H1 2021, which was double the figures in H2 2020. Fintech companies are focusing on improving and automating the delivery and use of financial services. Presently, London houses about 3,018 fintech firms, which is more than any other city in the world.
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In June 2021, Tractable, a company that collaborates with automotive insurance companies to enable users to take and submit photos of damaged cars that can be used to support claims, raised $60 million, increasing the firm’s valuation to £1 billion. As per the report, the company’s valuations in the fintech sector remained high despite the COVID-19 pandemic. Globally, the total number of £1 billion companies reached 163 in H1 2021, and overall global fintech investments surged from $87.1 billion in H2 2020 to a record-high $98 billion in H1 2021.
Fintech investments surge to continue beyond the pandemic
Fintech investments in the UK hit a record high in H1 2021, as corporates and venture capital investors invested heavily across various subsectors and jurisdictions. The COVID-19 pandemic has been pivotal in driving the adoption of digital strategies in the country’s financial services sector. Several major banking institutions in the country are also investing in the digital transformation of their services. Rising corporate investments in the fintech sector, the country’s historic reputation in the financial services sector, and ongoing focus on the development of fintechs in the country, are increasing the UK’s popularity in terms of fintech investments.
High valuations, large funding rounds, and successful exits in the country’s fintech sector have all been indicative of the rising digital engagement of customers, which increased during the pandemic and is expected to continue even beyond.