Investment into the UK fintech sector plunged in the first half of 2022 as war in Ukraine and soaring inflation saw a slowdown in the sector.

Cash flowing into the sector slid sharply to $9.6bn in the first half from $27.8bn in the same period in 2021, according to KPMG’s Pulse of Fintech.

While the fall is significant, the figure reflects a surge during 2021 and the trend is now back to pre-pandemic levels and is still higher than the $3.5bn invested in the first half of 2019.

The Russian invasion, supply chain disruption, as well as rising inflation and monetary policy tightening were all factors, said the research.

The data has emerged ahed of this week’s fintech summit taking place in Edinburgh, which brings together key players in the Scottish sector.

Lower levels of investment and deal volume were also detected in the Americas and EMEA regions. British fintech held up better than much of Europe.

“Despite a slowdown in UK fintech investment compared to last year, the UK remains at the centre of European fintech innovation with British fintechs attracting more funding than those in France, Germany, China, Brazil and Canada combined,” said John Hallsworth, client lead partner for banking and fintech at KPMG UK.

Among the weaker sectors, investment in insurtech dropped considerably, with $3.8 billion of investment globally — well off pace to match the $14.8 billion in investment seen during 2021.

Compared to a number of other areas, global investment in regtech showed strong resilience in the first half, attracting $5.6 billion in investment across 157 deals.

Anton Ruddenklau, global fintech leader, KPMG International, says: “The fintech market experienced a massive year globally in 2021, which makes it look like investment has somewhat fallen off a cliff so far in 2022.

“That really isn’t the case. We’ve simply shifted back to levels seen in 2019 and 2020.”