Geopolitical tension and a reset in venture capital fundraising are identified as key drivers of a slowdown in global fintech investment by industry body Innovate Finance. Global investment fell 20% to $43.5 billion across 6,264 deals.

The US stayed in the number one market position, raising $22 billion. The main investment hubs remain California and New York. The UK, with $3.6 billion in investment, retained second place, followed by India ($2.2 billion) and Singapore ($1.4 billion).

The European market was dominated by the UK, which saw 576 deals. France raised $1.1 billion across 127 deals, pushing the country back into the global top 10. Germany ($0.9 billion from 149 deals), along with Switzerland ($0.5 billion) and the Netherlands ($0.4 billion) also featured.

Venture capital

Those figures show investment in the UK fintech sector fall 37% last year as compared to 2023 levels. Tough market conditions including rising interest rates, geopolitical instability and “a recalibration in venture capital fundraising” were quoted as contributory factors by Innovate Finance.

The body’s CEO said: “The latest figures tell a compelling story of resilience and adaptability. The UK’s ability to attract $3.6bn in fintech investment during a year of economic turbulence reflects the strength and dynamism of our ecosystem.

“However, this is no time for complacency. We know the upswing in investment is coming, and we need to ensure that the UK is at the front of the queue as a destination for venture funding when it does.”

Innovation and reform

Innovate Finance would like to see more innovation and reform of regulation to help boost the sector, but industry insiders are talking about a greater focus on profitability and sustainability being a contributory factor, a contrast to the days when investors would “pray and spray” – meaning they would spend on a wide range of projects in the hope that a few would pay off substantially.

The report also found a 78% drop in funding for fintechs led by women, highlighting “the need for more inclusive funding practices.”

The top five global investment deals in 2024 were:

• Mynt at $788m (Digital payments platform based in the Philippines);
• Clear Street at $685m (Cloud-based brokerage platform, based in the US);
• Monzo at $621m (Digital Banking, based in the UK);
• Bolt at $450m (Payments, based in the US)​; and
• PayJoy at $360m (Lending, based in the US)​.

The full report can be found at Innovatefinance.com.