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Revolut’s pledge to invest £3bn in Britain last month was hailed by Rachel Reeves as a step-change for Labour’s growth mission.
After years of excitement around a flurry of start-ups, it appeared London finally had an established fintech giant of its own, opening a new headquarters in Canary Wharf with a pledge to create 1,000 UK jobs.
Yet, while Revolut’s meteoric rise is undoubtedly impressive, the company’s success has come at a time when London’s grip on the global fintech sector appears to be slipping.
According to figures from KPMG, total UK fintech investment fell to $9.9bn (£7.4bn) in 2024, down from $48bn in 2021 post-pandemic.
Worse still, trade body Innovate Finance predicts that Britain’s fintech investment fell behind that of the United Arab Emirates in the first half of 2025.
These figures potentially signal an end to what has been an undeniably strong run for the fintech industry since the financial crisis.
Led by Revolut, which is close to a deal that will value it at $75bn, the UK has succeeded in birthing a handful of fintechs that have risen to challenge the mainstream banks.
Nik Storonsky co-founded Revolut, one of the biggest success stories in recent Fintech history – Piaras Ó Mídheach/Getty
This includes the likes of Monzo and Starling, both of which have hoovered up millions of customers over the past decade, and are now worth £4.5bn and £2.5bn respectively.
But beyond this handful of success stories, doubts are growing over dozens of other upstart businesses facing questions over their future.
Underpinning fears are falling valuations, a slowdown in funding and the dwindling attraction of public markets.
Start-ups that once vowed to conquer global finance are now retreating, selling out to larger players or offloading stakes at knock-down prices.
As one source at a major European investment firm puts it: “If you haven’t got to the point where you are about to go public, you are panicking or selling to a larger strategic.
“Anyone in ‘buzzy’ consumer fintech late in the game is desperately trying to flog their assets.”
There are a number of high-profile UK businesses under pressure from the fintech squeeze.
Curve, a digital wallet start-up that had hoped to challenge Apple Pay, is in talks over a £120m sale to Lloyds, much lower than the £600m valuation achieved in 2021 during a crowdfunding campaign.
Unsurprisingly, the proposed deal has sparked a shareholder revolt as up to 20,000 retail investors brace for substantial losses.
London-based GoCardless, a loss-making digital bank payments business founded in 2011, is also nearing a sale to a Dutch rival, Mollie for $1.5bn. This is far lower than its $2.1bn valuation achieved in 2022.
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Then there is Freetrade, a stock trading app sold to trading group IG for £160m in April 2025, £490m less than its price tag in 2021.
“The problems in fintech mirror the wider tech market,” says Henry Whorwood, managing director at the consultancy Beauhurst. “A lack of liquidity is gumming up investment at all stages.”
Compounding the issue is the fact that the UK markets remain in a downward spiral, meaning companies are far more likely to be bought than to list on the London stock market.
At the same time, Britain’s biggest banks have collectively been enjoying a boost in profits owing to higher interest rates since the pandemic.
This has led to a jump in their respective share price valuations, another sign that the sector has successfully shrugged off competition from fintechs.
Tim Levene, the chief executive of UK-listed fund Augmentum Fintech, claims the current shake-out among fintechs is a consequence of the exuberance post-pandemic, when low interest rates saw valuations surge and investment pile in.
“Many companies raised too much money at unsustainable valuations,” he says. “The difficult exits we’re seeing now are an inevitable, and healthy, correction of that excess.”
Separately, while the UK has played host to plenty of fintech innovation, some technologies have been slow to take off.
Open Banking rules, which ordered big banks to share more information with rivals, helped launch a cluster of new businesses seeking to benefit. However, the number of payments made with Open Banking technology remains small.
Strict cryptocurrency rules have also burdened the sector, leaving UK fintechs falling behind rivals abroad.
However, despite the drop in funding and recent wave of consolidation, some positive signals remain.
Levene argues that while London’s era of fintech 1.0 is over, leading to clear winners such as Revolut, a second phase has begun.
He claims we’re entering a “new wave of fintech 2.0” built on companies founded by tech bosses who’ve cut their teeth over the past decade.
To ensure London doesn’t lose its fintech crown, there are growing calls for the Government to do more.
Ms Reeves, the Chancellor, recently confirmed plans for a new scale-up unit, intended to help fast-growing financial technology businesses access tailored support from City watchdogs.
However, further support may be needed to help build up British fintechs and ensure they list in London rather than moving abroad or selling out to larger rivals.
Philip Belamant, the chief executive of Zilch, a $2bn buy-now-pay-later business, says there are a “number of exciting businesses that could list and effectively form the bottom half of the FTSE 100 in the next three or four years”.
Yet he insists that the Government must roll out the red carpet in the form of incentives to make this happen.
“Go do it,” he says. “Let’s go build the economy.”