UK fintech investment hits decade low amid AI growth and regulatory warnings

UK fintech investment fell sharply in the first half of 2026, reaching £1.8 billion—a significant drop from £5 billion during the same period in 2025. According to KPMG’s Pulse of Fintech report, this represents a decade-low level of funding and deal activity, comparable to the early stages of the 2020 pandemic. While the UK remains a leading fintech market in the EMEA region, its share of total regional investment declined from 68% at the end of 2025 to 22% in the first half of 2026.

Despite the overall downturn, artificial intelligence (AI) and cybersecurity emerged as growth areas. AI-related fintech investment rose to £445 million across 79 deals, accounting for 25% of total UK fintech funding. Cybersecurity investment also saw a substantial increase, reaching £90 million compared to just £40,000 in the previous year.

Parallel to these market shifts, the Financial Conduct Authority (FCA) has issued warnings regarding the use of AI for investment advice. Research indicates that 56% of investors aged 18 to 40 trust AI tools, often more than traditional media. However, the FCA noted that 44% of respondents mistakenly believe AI-generated financial information is regulated, and many believe they would be entitled to compensation through the Financial Services Compensation Scheme if AI-driven advice leads to losses. The regulator emphasized that general-purpose chatbots like ChatGPT do not carry a regulatory safety net.