Investment in fintech companies increased sevenfold in 2021, contradicting findings from the independent Kalifa Review.
Investment in fintech companies hit £27.5bn in 2021, according to data from consultancy firm KPMG. This constituted a sevenfold increase compared to 2020.
KPMG reports that 600 mergers and acquisitions, private equity and venture capital deals finalised in 2021, up by 27% compared to 2020. The investment total was boosted by a string of high-value deals, with five of the 10 largest fintech deals in Europe, the Middle East and Asia being completed in the UK, according to KPMG data.
Britain has long been considered a global leader in fintech innovation, with London serving as the headquarters for many marquee names such as Revolut, Wise, Monzo and Starling. However, a year ago, an independent review of the sector, the Kalifa Review of UK Fintech, warned that the UK was at risk of losing its position as the global capital for fintech companies.
Many in the industry point to the current numbers as a counterpoint to the Kalifa report.
“This is a massive win, not just for the UK, but Europe and the rest of the world. This sort of investment drives competition and innovation forward,” says Anders la Cour, CEO of Banking Circle Group.
“The UK is the beating heart of this European fintech success story. It offers investors an attractive mix of the old and the new: centuries of expertise in financial services in the City of London, combined with thriving start-up hubs and access to talent at world-leading universities,” says Tom Henriksson, general partner at OpenOcean.
However, speaking on the state of UK Fintech at the Fintech Talents Festival in London last November, Ron Kalifa, the author of the report, commented that the UK does not have issues with cultivating fintech start-ups; instead, it had a “scale-up problem”. Scaling up, either from a global or product expansion point of view, can be a precarious time for many companies and is the most common period for new companies to falter or fail.
The increase in investment and deals in UK fintech, especially as the world starts to recover from a global pandemic, does call for optimism. However, the strength of the UK fintech space will be determined by several years, even decades, of investment deal and data.
