The UK accounted for more than half of European fintech venture funding in the first half of 2025, as the sector reached a point of maturity following a difficult couple of years, according to a Finch Capital report.
European fintechs secured €3.6 billion in capital investment in the first half of the year, up 23% on the same period the previous year, but still way down from the heights of H1 2022, when €15.3 billion was raised.
Nevertheless, the sector's importance is demonstrated by the fact that fintech accounted for 23% of all European funding, up from 18% in H1 2024.
The UK netted 56% of total funding, 79% of which is concentrated in London. The UK also shows greater scale and diversity than its European counterparts, being the only region whose top two deals constitute less than 50% of total funding.
London’s standout success can be attributed to homegrown fintech stars such as Monzo and Revolut, and its rich payments ecosystem, says Finch.
Germany, France and other markets are driven largely by one or two significantly sized deals in AI-driven compliance, wealthtech, and capital markets data analytics. While Germany’s median deal value is up 189% YOY, its volume count is 27, lagging behind France’s 38.
AI-based start-ups and scale-ups account for 21% of deal volume in European fintech (up from 16% in 2024) but only seven per cent of deal value in H1 2025.
However, a closer look at R&D teams in the report reveals a stark stemming of growth in engineer teams since 2022 when there was a 20% increase in net new hires at top fintech firms. This fell to 14% in 2023, nine per cent in 2024 and it is expected to be a mere two per cent by the end of 2025.
This, says Finch, is because firms are optimising activities, focusing on computer engineering- fine-tuning existing models, maintaining and integrating, rather than building.
Aman Ghei, partner, Finch Capital, says: “Firms don’t have resources to develop their own models, per se, hence they need to use what’s out there, putting their own wrapper on it. That is what’s happening in the market today and what probably will happen for the next year or two.
“Replacing front-end engineers, the biggest job posting out there is prompt engineer-- someone who interacts with language models get the best output possible from an engineering perspective. Now, you don’t have to worry about needing as many engineers to grow your business.”