Revenue-based financing and the environment are expected to become big fintech themes in the UK over the coming months after the sector reached record levels of investment, research claims.
KPMG’s latest Pulse of Fintech report found that UK fintechs attracted $24.5bn (£17.7bn) of investment in the first half of 2021, the highest volume of deals on record and second only to the $42.1bn in the US.
Investment in UK fintech was boosted by the London Stock Exchange acquiring data analytics firm Refinitiv for $14.8bn.
The UK also registered a record volume of deals completed at 283 – the most since the report began.
Revenue-based financing and tools focused on environmental, sustainable and governance (ESG)-solutions as well as carbon tracking and offsetting are expected to be big themes this year for fintech, according to the report.
KPMG also predicted consolidation among more mature areas of fintech as well as more regulatory scrutiny of crypto assets and a strong focus on digital identity.
Read more: UK increases presence on KPMG Fintech100
“UK fintechs attracted significantly more funding than their counterparts in the rest of Europe, the Middle East and Africa combined,” Karim Haji, UK head of financial services for KPMG, said.
“Covid-19 has spurred a race to digital in UK financial services and many of the major banks have dipped into their investment pots for digitalisation – a major reason we are seeing so much corporate investment.
“This timing, together with the UK’s reputation as a historic financial services sector and ongoing work to nurture fintechs, from testing through to listing, makes the UK a magnet for investment.”
Global fintech investment reached $98bn.
“Overall investment in fintech surged to a record high in the first half of 2021 as investors, particularly corporates and venture capital investors, made big bets on market leaders in numerous jurisdictions and across almost all subsectors,” Ian Pollari, KPMG’s global fintech co-lead, said.
“Large funding rounds, high valuations and successful exits underscore the thesis that digital engagement of customers that accelerated during the pandemic is here to stay.”