UK FinTech deal activity on track to drop 12% in 2023

uk fintech investment graph
Key UK FinTech investment stats in H1 2023
• UK FinTech deal activity reached 246 deals in H1 2023, a 14% decrease from H1 2022
• UK FinTech companies raised a combined $1,389m in H1 2023, an 80% drop YoY
• WealthTech was the most active UK FinTech subsector with a 18% share of total deals
The UK experienced negative results in H1 2023 with investment dropping significantly to their lowest levels in the past 5 years. In the first half of 2023, the number of FinTech deals in the UK amounted to 246, representing a 14% decline compared to the first half of 2022. This is much better than France for example which recorded a 42% drop in FinTech deal activity. Based on deal activity in H1 2023 deal activity is expected to reach 492 deals, a 12 drop from 2022 levels. In the first half of 2023, UK FinTech companies collectively raised $1389m, reflecting a significant 80% decrease compared to the same period in the previous year.
Quantexa, which provide data analytics for anti-money laundering, had the largest FinTech deal in H1 2023, raising $129m in their latest Series E funding round, led by GIC. In what has been a difficult period for many tech companies, Quantexa continues to post impressive growth, having grown their ARR over 100% since closing their Series D round. In the same time period, Quantexa has seen robust growth in all regions, including a breakout performance in North America, with an increase in ARR of over 180%. This new capital will ensure that Quantexa continues to grow its global presence and invest in its world-class engineering talent. Quantexa also plans to use the funding to boost technology innovation efforts and strengthen its Decision Intelligence Platform capabilities in low-code data fusion, graph analytics, machine learning (ML), natural language processing (NLP) and artificial intelligence (AI). Additionally, Quantexa will increase focus on accelerating joint go-to-market efforts with its flagship partners which include Google, Moody’s, Accenture, KPMG, Deloitte, and EY.
WealthTech was the most active FinTech subsector, representing 18% of the total deals announced with 44 deals. Transaction value in Neobanking is projected to reach $772bn in 2023 and grow at a CAGR of 18.7% from 2023 to 2027.  User penetration is expected to be 27.8% in 2023 and is on track to hit 40.4% by 2027.
In response to the consultation by the Bank of England and the Treasury regarding the introduction of a central bank digital currency, UK Finance, a major finance trade body in the UK, has recommended imposing a limit on customer holdings of the “digital pound” to £3,000-£5,000. The organization expressed concerns about the potential risks of widespread bank runs that could occur if higher limits were allowed. UK Finance, which represents banks and financial firms, outlined its position regarding the launch of the digital pound by the end of the decade. They opposed the initial suggestions put forth by the government and the Bank of England, which proposed a temporary limit of £10,000-£20,000 in order to safeguard retail banks against significant deposit outflows. According to UK Finance, setting a lower limit on customer holdings would mitigate the potential impact of mass withdrawals and help maintain stability within the banking system.
The data for this research was taken from the FinTech Global database. More in-depth data and analytics on investments and companies across all FinTech sectors and regions around the world are available to subscribers of FinTech Global. ©2023 FinTech Global

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