Britain’s investment in the financial technology industry has hit a new record, with almost £18bn worth of deals in the first half of this year, placing the UK second in the world behind the US. London’s Square Mile continued to dominate Europe’s fintech sector, attracting investors from across the world who bought more than 280 of the UK’s most advanced digital financial companies. The buying spree came despite the government’s failure to secure a Brexit deal with Brussels that would give the City equivalence with financial companies operating inside the EU single market. According to the Pulse of Fintech report by the consultancy KPMG, a bi-annual report on fintech investment trends, the UK secured investments of $24.5bn (£17.7bn), second only to the US, which hit $42.1bn and more than four times the $5.9bn of investment seen in the UK during 2020. KPMG said the total for the UK was given a one-off lift by the $14.8bn purchase by the London Stock Exchange of the financial data provider and Bloomberg rival Refinitiv, but the UK’s new record of 283 deals completed was well ahead of anywhere outside the US. Venture capital firms, which focus on buying smaller startup businesses, were especially active with fintech-focused investments in the UK, reaching $6.2bn, more than double the level in the second half of 2020. Fintech firms seek to improve and automate the delivery and use of financial services, though the definition is considered by many in the financial services industry to be hazy when most businesses operate through websites and digital platforms for at least some of their activities. According to one survey, London is home to 3,018 fintech companies, more than in any other city globally. In June, Tractable, which works with automotive insurance companies to let users take and submit photos of damaged cars that are then used to support claims, raised $60m, valuing the firm at £1bn. Fintech valuations remained high despite the pandemic, said KPMG, and the number of £1bn companies created hit 163 across the world in the first half of the year. Global fintech investment surged from $87.1bn in the second half of 2020 to a record $98bn in the first half of 2021. Karim Haji, EMA and UK head of financial services at KPMG, said: “UK fintechs attracted significantly more funding than their counterparts in the rest of EMEA combined. “Covid-19 has spurred a race to digital in UK financial services and many of the major banks have dipped into their investment pots for digitalisation – a major reason we are seeing so much corporate investment. “This timing, together with the UK’s reputation as a historic financial services sector and ongoing work to nurture fintechs, from testing through to listing, makes the UK a magnet for investment.” Ian Pollari, KPMG’s global fintech co-lead, said: “Global fintech investment surged from $87.1bn in the second half of 2020 to a record $98bn in the first half of 2021. “Large funding rounds, high valuations and successful exits underscore the thesis that digital engagement of customers that accelerated during the pandemic is here to stay.” Pollari said: “Overall investment in fintech surged to a record high in the first half of 2021 as investors, particularly corporates and VC investors, made big bets on market leaders in numerous jurisdictions and across almost all subsectors. “Large funding rounds, high valuations and successful exits underscore the thesis that digital engagement of customers that accelerated during the pandemic is here to stay.”