Brazil, Canada and the Netherlands buck trend with investment set to recover in 2025
A UK fintech body has warned against complacency in the industry amid a backdrop of falling investment worldwide and growing competition from other markets, even as the country remains the second largest destination for fintech funding behind the US.
A report released on Thursday by Innovate Finance found that global capital deployed into fintech fell 20 per cent in 2024 compared to the previous year, dropping from $54.2bn in 2023 to $43.5bn in 2024, but offered hope for a resurgence in investment for the year ahead.
Following a peak in the amount of capital deployed to fintechs worldwide in the first half of 2022, investment levels have since decreased globally year-on-year as a result of a cyclical downturn prompted by the economic impact of the Covid-19 pandemic and geopolitical instability.
While the UK has been a global leader in fintech for the past decade and received $3.6bn in fintech investment in 2024, this marked a 37 per cent drop compared to the previous year.
“The UK’s ability to attract $3.6bn in fintech investment during a year of economic turbulence reflects the strength and dynamism of our ecosystem. However, this is no time for complacency,” said Janine Hirt, CEO of Innovate Finance.
“We know the upswing in investment is coming, and we need to ensure that when it does, the UK is at the front of the queue as a destination for VC funding,” she said, referring to positive indicators renewed investment, such as the 6 per cent increase in fintech investment during the second half of 2024 compared to the first half of the year.
The US continues to lead in fintech investment, securing $22bn across 2,633 deals in 2024, although investment values fell 13 per cent during the year.
California and New York remain the country’s main hubs for fintech investment, attracting $7.8bn and $6.7bn respectively last year.
The country’s fintech market is now preparing for a phase of growth under a new government, according to Innovate Finance.
“The incoming Republican administration will likely introduce deregulation across the industry, fostering a more permissive environment for crypto and unlocking broader innovation across financial services,” said Gareth Jones, co-founder and CEO of venture capital firm Fintech Collective, in the report.
India and Singapore remain in third and fourth positions respectively in terms of investment valuations. India attracted $2.2bn from 274 deals last year, falling from $3.4bn in 2023, but saw investment activity recover strongly in the second half of the year. Singapore secured $1.4bn from 311 deals, marking a 47 per cent drop from the previous year.
Fintech investment in Brazil, Canada and the Netherlands, however, rose despite the global downturn.
Brazil, which almost doubled its investment volume in 2024 to $1.3bn, entered the top 10 globally. Canada saw a 27 per cent increase last year compared with 2023, with more than $1.6bn worth of deals in 2024. The Netherlands saw investment in its fintechs rise 30 per cent to $400mn in 2024.
Global venture capital investment saw a 9 per cent increase in 2024 compared to 2023, the report noted, which may be a “leading indicator” for fintech investment in 2025.
Moreover, the second half of 2024 saw US fintech investment increase by 11 per cent compared to the first half, with investors “possibly anticipating a pro-fintech environment” this year, the report said.
Tim Levene, CEO of fintech fund Augmentum Fintech, is “optimistic” about continued recovery.
“The reopening of the IPO market, paired with the potential for a more M&A-friendly environment in both the UK and US, could reinvigorate global exit opportunities and further restore investor confidence in the sector,” said Levene in the report.
The second half of 2024 saw global fintech investment increase by 6 per cent compared to the first half of the year, the report noted, despite four falling half years of investment since the second half of 2021.
Last year, several large investments highlighted the sector’s ability to fund during a market downturn, with the UK’s digital bank Monzo receiving one of the largest investments, worth $621mn.
With market recoveries typically “led by the strongest names first”, the report noted Monzo’s investment as an encouraging sign.
Investment data suggests encouraging signs from the US market in the second half of 2025 and the wider global venture capital market. The UK, however, is “still lagging this trend and has not yet shown signs of turning”, the report said.
