TL;DR

Investment into UK fintech dropped 67% against last year, landing at £1.8bn ($2.46bn) over January to June — the weakest half since at least 2016 — while fintech funding globally more than doubled. AI-linked fintechs took a quarter of what remained. Britain’s slice of EMEA fintech money dropped from 68% to 22%.

Real, but partly arithmetic

The comparison base was inflated. BlackRock’s £2.3bn purchase of Preqin, plus £371.5m into Rapyd and FNZ, supplied roughly 56% of the £5.4bn booked a year earlier. Remove a handful of outsized transactions and the fall looks less like a market closing than a market without megadeals.

Deal counts support that. FinTech Global recorded 187 fintech deals in Britain over the half, three more than last year, with Britain still providing 35% of European activity — comfortably ahead of France on 11% and Germany on 8%. Six of Europe’s ten largest fintech transactions were British, led by around £550m ($748.1m) for Santander-owned Ebury and roughly £128m ($175m) for Paymentology.

Where the money actually went

Tracxn’s narrower measure locates the retreat by stage: late-stage funding down 45% to about £610m ($830m), early-stage up 27% to roughly £410m ($562m), seed broadly flat on the year and 93% above where it sat in late 2025. Investors have not left. They have stopped writing the biggest cheques.

AI is where they went instead. AI-related fintechs took £445m spread over 79 deals, lifting their slice of the British fintech total from 16% to 25%. Beyond fintech the rotation is starker still: British startups raised about £12.5bn ($17bn) across those six months, more than double a year earlier, with roughly £9.2bn ($12.6bn) going to AI companies — and all four UK rounds above $1bn went to AI businesses.

“There are pockets of significant demand, particularly in AI,” said Hannah Dobson, who heads fintech at KPMG UK.

Looking forward

Two cautions. Comparability across these datasets is poor — Bloomberg puts the prior-year figure at 281 deals, where KPMG’s own earlier release said 216, and each provider defines the sector differently, so the 67% headline deserves a wide error bar. But the structural point survives the caveats: fintech was Britain’s best-funded technology sector in 2024, and is not now.

For founders outside AI this is a repricing rather than a drought. The capital that built London’s fintech cluster has not gone anywhere; it has changed what it wants to buy. The uncomfortable detail is the stage distribution. Seed is holding while late-stage collapses, which puts the pressure on companies that have already scaled — the ones carrying the largest payrolls and with the least room to sit out a bad year.