UK FinTech sees no deals over $100m in Q3 2023, last occurring in Q2 2017

Key UK FinTech investment stats in Q3 2023:
• UK FinTech deal activity reached 85 deals in Q3 2023, 43% decline compared to the same period in 2022
• UK FinTech companies raised a combined $401m in investment during the third quarter, a 71% drop YoY
• RegTech remained the UK’s most active FinTech subsector with 19 transactions, a 22% share of deals

The UK’s FinTech sector has seen another drop in FinTech deal activity and investment compared to the previous quarter with deal activity dropping 44% and investment dropping 37%. In Q3 2023, the UK’s FinTech sector witnessed a total of 85 deals, marking a 43% decrease compared to the same period in 2022. UK FinTech firms secured a collective investment of $401m in Q3 2023, representing a significant 71% YoY decline.

Curve, a banking platform that consolidates cards and accounts into one smart card and app, had the largest FinTech deal in the UK during Q3 2023, raising $71.4m (£58m) in their latest Series C extension funding round. The new funds will be used to improve the overall customer experience (Curve just recently rolled out its new app, which includes a marketplace of financial applets), expand its Flex offerings, and bring exciting new partnerships to the market. The Series C extension round saw participation from Britannia, IDC Ventures, Cercano Management (the venture arm of Microsoft co-founder Paul G. Allen’s estate), Cohen Circle, Outward VC and other existing shareholders. According to the app it also has new partnerships to bring to the market, and specifically mentioned one with a “payments giant” to be announced later this month. “This last raise, like any raise, brings with it renewed responsibility to our shareholders and our customers; to build a good product and an exciting business, by executing well,” Curve founder and CEO Shachar Bialick said.

RegTech was the most active FinTech subsector in Q3 2023 with 19 deals, a 22% share of deals. This was followed by WealthTech which saw companies raise 17 deals, a 20% share of total deals and Blockchain & Digital Assets was the third most active subsector with 10 deals, a 11.7% share of deals.

The latest UK FinTech regulation comes from The Payment Systems Regulator (PSR). The PSR issued a policy statement on June 7, 2023, introducing a mandatory reimbursement requirement to combat APP fraud within the Faster Payments system. While broadly supported, the proposal raised concerns among industry stakeholders. The PSR has adjusted its policy, and reimbursement costs will be shared equally between sending and receiving firms. Most victims of APP fraud will be reimbursed within five days, with added protection for vulnerable customers. Implementation is set for 2024, with legal instrument consultations in 2023. The PSR will gain enforcement powers through the Financial Services and Markets Bill 2022-23.

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