In 2024, the UK’s fintech ecosystem maintained its position as the second-largest globally after the US in funding. According to the Tracxn report, total funding reached $4.9 billion — a slight 2% decrease from $5 billion in 2023 and a 57% decline from $11.5 billion in 2022.
Despite its historical prominence, 2024 marked a five-year funding low. This decline can be attributed to a variety of factors, including evolving regulatory complexities such as stricter compliance requirements in digital assets and online payments. These regulations have created investor uncertainty, leading to increased caution over fraud and cybersecurity concerns. Additionally, macroeconomic challenges including inflation and rising interest rates have further dampened investment in the sector.
Tech Funding News spoke to CONCRYT, Tribe Payments, Lenkie, Vitesse, Delio, Intix, and FintechOS, leading players in the fintech landscape, about the industry’s outlook for 2025.
Fintech snapshot: $4.9Bn, 2 IPOs and 1 Unicorn
In 2024, the fintech sector secured $4.9 billion across 327 funding rounds, with 142 Series A rounds and 114 first-time funded companies. The ecosystem expanded with 20 new soon-to-be unicorns, one new unicorn (Moniepoint’s $110M Series C at $1B valuation), 87 acquisitions, and two IPOs (Marex and Diasoft).
In 2024, the funding stages in the fintech sector showed mixed results. Late-stage funding fell to $2.1B, a 13% decrease from 2023 and a 68% decline from 2022. On the other hand, early-stage funding grew to $2.5B, a 19% increase from 2023 but 40% below 2022. This shift in funding patterns indicates a changing investment landscape, with investors showing more interest in early-stage ventures with high-growth potential.
Ryta Zasiekina, Founder of CONCRYT commented: “An uncertain macroeconomic backdrop has put the brakes on fintech spending. Another important factor has been the UK government’s plans to reduce the number of people eligible to invest in start-ups, which has thankfully since been reversed. Moving forward, it’s essential that national governments don’t introduce rules that could threaten investment, and instead focus on encouraging more women into fintech rather than deterring them through short-sighted legislation that could restrict funding when fintechs need it.”
Q2 2024 led the year’s funding with $2.08B — 42% of the annual total — while Q3 marked the lowest point. The year saw eight $100M+ funding rounds, compared to ten in 2023 and 24 in 2022. Notable rounds included Abound’s $1B Series B, Monzo‘s Series I rounds ($430M and $191M), Zepz‘s $267M Series F, and Flagstone‘s $139M Series B.
Lynda Clarke, Chief Operating Officer at Tribe Payments, noted: “In 2020-2021, we saw an unprecedented boom in VC funding, fuelled by low interest rates and pandemic-driven digital acceleration, particularly in payments. This continued into 2022 and has started to reduce. The years 2021-2022 were considered “excessive” by many analysts. It led to inflated valuations and overfunded startups. As such, 2024 reflects a necessary market correction – where investors prioritise profitability and sustainability over rapid, unchecked expansion.”
Following its 2021 peak, the sector experienced a steady decline, with 2024 recording a five-year low. This downturn stemmed from stricter compliance requirements in digital assets and online payments, creating investor uncertainty. Rising inflation and interest rates further dampened investment by increasing borrowing costs and reducing consumer spending.
Teo Blidarus, CEO and Co-Founder of FintechOS, commented: “This reflects an increasingly challenging investment climate. Funds are shifting toward sectors like AI, and market conditions have made investors more cautious, seeking higher-growth potential areas over traditional fintech ventures.”
He added, “However, AI’s rise creates new fintech opportunities. As reg tech, banking-as-a-service (BaaS), insurtech, and other fintech areas integrate AI into their offerings, investors are drawn to solutions leveraging AI capabilities. While overall fintech funding declined in 2024, AI-driven innovation sparks renewed interest and potential growth.”
Policy reforms and innovation support fuel UK fintech growth
The Tracxn report highlights the UK government’s comprehensive approach to strengthening the nation’s fintech ecosystem through regulatory reforms, innovation accelerators, and funding initiatives.
Gareth Lewis, Co-Chief Executive at Delio, commented: “The UK government has recognised its heavy emphasis on risk regulation over growth regulation, with clear consequences. More support is needed for fintechs, particularly outside London. Smarter regulation and stronger investment incentives should boost growth as we enter H2.”
The UK has pioneered policy-led innovation globally through several key initiatives: the Financial Conduct Authority’s (FCA) Regulatory Sandbox, the Global Financial Innovation Network (GFIN), the Open Banking framework, and the AI Sector Deal — setting a global benchmark. The FCA’s Innovation Hub demonstrates the effort to reduce regulatory burdens on fintech companies.
The FinTech Pledge demonstrates the government and industry’s commitment to growing the UK’s fintech sector through efficient and transparent bank-fintech partnerships. A new financial services growth and competitiveness strategy, due in spring 2025, aims to strengthen the industry further.
Phil McGriskin, CEO and founder of Vitesse, added, “The UK has long been a fintech powerhouse, effectively balancing regulation and innovation. Unlike markets where regulatory uncertainty hinders progress, the UK’s focused, industry-specific regulations create an environment where fintech can thrive. This framework gives businesses confidence to scale while maintaining financial stability and trust.”
McGriskin continued: “The UK’s position as a global insurance leader has been crucial to this success. With world-leading financial oversight, the sector breeds fintech innovation. The regulatory framework has driven the development of smarter, more efficient financial infrastructure, improving liquidity management, claims payments, and embedded financial solutions that transform insurance money movement.”
Alternative lending leads with $1.53B amid segment shifts
The Alternative Lending segment secured $1.53B in 2024, rising 67% from 2023’s $918M and 3% from 2022’s $1.48B. Notably, Abound, an online personal loans platform, raised $1B in Series B funding led by GSR Ventures and Hambro Perks, representing 65% of total Alternative Lending funding. The company declined to comment on its plans with TFN.
Banking tech funding reached $1.21B in 2024, up 28% from 2023’s $944M but down 41% from 2022’s $2.04B. The payments segment attracted $621M, falling 25% from 2023’s $832M and 81% from 2022’s $3.21B.
Blidarus noted: “These segments should maintain growth momentum throughout the year. Insurance sector expansion is expected in 2025, particularly in insurtech. As insurers adapt to market changes, they seek insurtech partnerships for AI integration. This framework encourages investment and innovation, requiring close monitoring of its evolving impact.”
Lewis added: “Moving into 2025, we expect growth in the WealthTech sector, especially in wealth management infrastructure, emphasising personalised client experiences. As demand for tailored financial advice grows, and technology makes personalisation feasible and cost-effective, customisation will become essential rather than a premium feature.”
Digital remittance and Forex tech proved to be 2024’s weakest segments, with digital remittance funding plunging 86% and Forex tech declining 55% compared to 2023.
London secures 94% of UK’s fintech investment, ranking third globally
London has dominated UK fintech funding for five consecutive years, now ranking as the world’s third-largest funded city — after the Bay Area and San Francisco. The capital attracted 94% ($4.5B) of UK fintech funding, with Andover ($120M), Maidstone ($32.7M), Tortola ($32.5M), and Manchester ($28.9M) following distantly behind.
Looking ahead, AI and blockchain are poised to shape the industry’s future. Joris Lochy, Product Manager at Intix, concludes: “New fintech opportunities will emerge in AI model setup, compliance, and monitoring. These will encompass AI training, bias detection, anomaly monitoring, and regulatory transparency. AI-driven innovations like invisible payments, conversational banking, and dynamically optimised financial accounts, will drive demand for seamlessly integrated fintech solutions.”
Sanjeev Jeyakumar, CEO and co-founder of Lenkie, emphasised: “AI-powered alternative credit scoring is another interesting area where alternative data sources such as behavioural data, online presence or transactional data can be used to build far more sophisticated models which assign a dynamic credit score based on this real-time data, offering a more comprehensive view of a borrower’s creditworthiness. This allows fintechs to create greater financial inclusion, particularly in segments where traditional data is often missing or incomplete.”
Zasiekina concluded: “This year I believe we’ll see even more mobile contactless adoption through digital wallets, wearable tech, and other alternative payment methods (APMs) outside of the traditional payment form factors. The Asia-Pacific region will continue to show the rest of the world how digital wallets can be leveraged for maximum effect, with APMs like WeChat Pay and Alipay becoming even more widely accepted outside of their home markets. Unlike mature developed markets in Europe and North America, emerging countries will use digital wallets as a key driver of financial inclusion.”
