UK Dominates 65% of European Fintech Deals Amid Funding Drop

Despite a 25% year-on-year decline in overall fintech funding across Europe, the UK continues to lead, capturing 65% of all deals in the region, writes PaySpace Magazine. According to Finch Capital's annual "State of European Fintech" report, the UK accounted for 65% of the region's fintech investments in the first half of 2024.

The sector, however, faces several ongoing challenges. Rising interest rates, a heightened focus on cost efficiency, and increased scrutiny of business model sustainability have contributed to the 25% drop in Europe-wide fintech funding. In total, European fintech firms raised €2.9 billion across 443 deals in the first six months of 2024.

In contrast, UK fintech funding grew by 3% year-on-year, increasing from £1.9 billion in H1 2023 to £2.2 billion in 2024. The largest deal in Europe during this period also occurred in the UK, with neobank Monzo raising approximately £500 million to support its global expansion. The total $610 million round marks the biggest funding event for a European fintech company in a year, with $430 million secured in March and an additional $190 million in May 2024. One driver behind such large deals, like Monzo's, is the profitability surge among challenger banks due to higher interest rates. As a result, the banking sector has emerged as the most established sub-sector, drawing the largest investments.

Meanwhile, the crypto sector saw the most deal activity in H1 2024, attracting significant attention and investment at early stages. Although it ranked second in terms of deal value, it offers a growing number of opportunities. The report also highlighted a slowdown in funding for fintech unicorns, while mid-market mergers and acquisitions (M&A) activity across Europe has seen an uptick.

Fintech sectors in the Netherlands and Nordic countries demonstrated stability, with steady investment volumes. In Ireland, Germany, and France, government-backed initiatives are driving fintech growth through 2025, contributing to stable funding levels in these regions and providing a foundation for further expansion as the ecosystems evolve.