Investment in the UK FinTech sector fell sharply in the first half of 2026, yet funding for AI-focused companies continued to grow, according to a new report from KPMG.
The consulting firm said total UK FinTech investment reached £1.8 billion in the first six months of the year, down from £5 billion during the same period in 2025. This marked the lowest level of investment since KPMG began tracking the market in 2016 and put activity on a par with the early stages of the Covid-19 pandemic in 2020.
The number of UK FinTech deals also dropped to its lowest level in a decade. Investors completed 205 mergers and acquisitions, private equity and venture capital deals in the first half of 2026, compared with 281 a year earlier.
Despite the slowdown, KPMG said the UK remained the largest FinTech investment market in Europe and across the wider EMEA region. However, its share of total EMEA fintech investment fell to 22 per cent in the first half of the year, compared with 68 per cent at the end of 2025.
The UK’s largest fintech deals included Ebury’s £543 million private equity investment, Paymentology’s £129 million private equity investment, and 9fin’s £124 million funding round.
While overall investment declined, AI-focused FinTechs attracted more funding than a year earlier. Investors committed £445 million across 79 deals during the first half of 2026, up from £382 million across 67 deals in 2025.
AI-related FinTechs accounted for 25 per cent of all UK fintech investment, compared with 16 per cent a year earlier. The UK also remained Europe’s largest market for AI fintech investment, ahead of France at £244 million and Germany at £134 million.
Cybersecurity FinTech investment also increased significantly. Funding reached £90 million across seven deals in the first half of this year, compared with just £40,000 across three deals in the same period last year. Although cybersecurity represented only 5 per cent of total UK fintech investment, the UK overtook Germany as Europe’s largest market for investment in the sector.
Globally, FinTech investment increased to £75.8 billion in the first half of 2026, up from £53.1 billion in the second half of 2025. However, the number of deals fell from 2,501 to 2,100 over the same period, reflecting continued investor caution.
The Americas attracted more than 80 per cent of global FinTech investment, with the US accounting for £59.4 billion. Investment in the EMEA region totalled £8.3 billion across 626 deals, while the Asia-Pacific region attracted £3.4 billion across 350 deals.
Hannah Dobson, head of fintech and partner at KPMG UK, said that investors continued to support areas with long-term growth potential, including AI and cybersecurity, despite becoming more selective about where they deployed capital.
“It has been a challenging start to 2026, with levels of investment on a par with those seen during the first wave of the pandemic,” she added. “That said, there are pockets of significant demand, particularly in AI, where investment is gaining prominence even as the wider market has softened.”
