UK: Fintech investment surges after regulation refresh.

As published on cityam.com, Thursday 6 January, 2022.

Investment into UK fintech firms surged last year as investors looked to capitalise on new regulation in the sector, research has revealed.

Total investment into British fintechs jumped more than 217% to $11.6bn in 2021, second only to US firms globally which saw $46bn of investment, according to figures from Innovate Finance, the UK fintech industry body.

The UK’s fintech sector outpaced the rest of Europe and dominated the continent in terms of capital invested. Overall, $24.3bn was invested across Europe with the UK attracting nearly half of total investment.

The surge in funding will provide a boost to the sector as regulators and ministers implement a swathe of new measures recommended by Lord Hill’s Review of UK listings and the Kalifa Review of fintech and last year, designed to cement the UK’s position as a fintech hub beyond Brexit.

Janine Hirt, CEO of Innovate Finance, told City AM: “There is now a clear regulatory roadmap for strengthening fintech in the UK, and both fintechs and investors are taking note of that.

“We have historically always been a leader in financial services and innovation – and the regulatory environment we have created is crucial to ensuring we cement that position.”

London’s fintechs continue to lead the pack domestically and attracted $9.2bn of investment in total.

But investment into the regions has accelerated rapidly with $696m invested outside London and the South East, compared to $206m in 2020..

The UK also boasted 32 ‘mega rounds’ last year – those totalling over $100m invested – including digital bank Revolut’s $880m round in July which was among the top 10 most valuable rounds globally.

Lord Gerry Grimstone, Minister for Investment, said: “Thanks to our welcoming business environment and our world-class fintech ecosystem, we more than doubled 2020’s fintech inward investment figures, with more than 10% of deals worldwide landing on UK soil.”

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