The UK’s fintech sector remains a global leader, bolstered by its robust regulatory environment, global financial services network, and innovation-friendly frameworks
The United Kingdom maintained its strong position as the second highest-funded fintech startup ecosystem globally in the first quarter of 2025, trailing only behind the United States, a new report from Tracxn revealed. India secured the third spot, showcasing its resilience despite global economic challenges.
According to the report, late-stage funding rounds dominated fintech investments globally in Q1 2025. The sector saw a major boost, with late-stage funding rising 47 per cent to $227 million from $154 million in the previous quarter (Q4 2024).
Overall, the first quarter recorded $366 million in total fintech funding, with March emerging as the most active month, accounting for 51 per cent of the quarter’s total with $187 million raised.
Global macroeconomic headwinds — including bearish stock markets, rising inflation, US-imposed tariffs, and ongoing trade tensions — have continued to pressure venture capital activity. However, fintech ecosystems in the US, UK, and India have shown significant resilience.
The UK’s fintech sector remains a global leader, bolstered by its robust regulatory environment, global financial services network, and innovation-friendly frameworks. Meanwhile, India’s GDP growth for FY 2025 is projected to hold steady at around 6.5 per cent, providing a stable backdrop for its emerging fintech players.
The report also highlights the rising international adoption of India’s UPI (Unified Payments Interface) technology in countries like Singapore, Nepal, and Sri Lanka — a trend that could offer collaborative opportunities for UK fintech firms seeking cross-border partnerships.
Segment-wise, banking tech, Internet-first insurance platforms, and investment tech were the top-performing verticals globally in Q1 2025.
Banking tech emerged as the highest-funded sector, raising $108 million — a 9 per cent increase compared to Q1 2024 and a staggering 1,700 per cent jump from Q4 2024 figures. This sector accounted for nearly 30 per cent of total fintech funding during the quarter.
Neha Singh, Co-Founder of Tracxn, commented: “The global fintech sector continues to evolve despite market fluctuations. While overall funding levels have softened, long-term growth prospects remain robust.”
“With regulatory frameworks maturing, digital payments expanding globally, and a strong pipeline of innovation, we anticipate fintech startups, particularly those from leading ecosystems like the UK, to capture exciting new opportunities,” she added.
The first quarter also witnessed 10 acquisitions globally in the fintech space, representing a 67 per cent increase compared to Q1 2024, and doubling compared to Q4 2024. Among Indian cities, Bengaluru led in fintech funding raised during Q1 2025, followed by Gurugram and Mumbai, indicating strong regional growth in South Asia.
