EXCLUSIVE: "Fintech’s Fundraising Fallout – And Why There’s Reason Be Cheerful" - Thomas Easterby, HSBC Innovation Banking in 'The Fintech Magazine'

As the investment landscape rapidly shifts in the age of AI, Thomas Easterby reflects on the stage of UK fintech innovation and whether challengers are getting all the support they need to start, scale and stay here
The UK may boast a pro-innovation regulatory environment and a government that promises it’s ‘backing investment and innovation to power good growth’, but could the faucet of funding into UK fintech be dripping dry?

In 2025, total investment into fintech dropped 21 per cent, from £9.8billion in 2024, ending the year at £8billion – its lowest since 2020, according to the KPMG Pulse Of Fintech 2025 report, while HSBC Innovation Banking’s Q1 2026 report, compiled in partnership with Dealroom, showed the sector darling falling further from favour.

“In Q1 of this year, we saw fintech decrease from being the most-funded sector to the sixth most-funded sector. We’ve not seen it come out of the top two or top three since 2021,” says Thomas Easterby, Head of FinTech at HSBC Innovation Banking UK.

The news sounds particularly alarming when you consider UK venture investment across the board has reached near-record highs. The HSBC Innovation Banking/Dealroom 2026 half-year update showed $17billion has flowed into businesses – 102 per cent up on 2025 and almost as much capital raised as in 2023 and 2024 combined. There have been notable fintech outliers, of course. Of the five scaling UK fintechs that top the growth and revenue rankings for the past three years – Allica Bank, Monument Bank, ClearBank, Volt, and Abound – three have closed multi-million-pound rounds in the past 18 months, the most recent being Monument’s £18million seed round in June. 
Revolut’s undisclosed secondary mega raises in 25/26 are estimated to have been in the billions.

 And, according to KPMG’s Pulse Of Fintech report, the UK is still doing well on the world stage, too. It attracted the largest share of fintech investment in Europe in 2025 and reclaimed its position as No. 2 in the world behind the US, according to Innovate Finance. It’s a confusing picture. Is it as gloomy as those earlier figures suggest? Has something fundamentally shifted that’s making it harder for UK fintechs to get the cash they need?

A changing landscape

A lot has undoubtedly changed since the fire sale of Silicon Valley Bank (SVB) to HSBC in 2023 and the creation of HSBC Innovation Banking to take on SVB’s original 3,300 clients (including a sizeable number of regulated fintechs) after its US parent collapsed. HSBC Innovation Banking has continued to match SVB’s specialist banking for companies through their high-growth life stages that a standard banking team wouldn’t have the knowledge and expertise to provide. It’s built a much-needed access-to-finance pathway in the life sciences and tech sectors, too, providing startups with revenue facilities, corporate finance and structured growth capital, as well as direct introductions to the parent bank’s investment arm, HSBC Ventures, to explore venture debt and equity options.

In that time, HSBC Innovation Banking has, among other UK fintech-specific deals, made a £50million revolving credit facility available to Clearscore; put a £350million syndicated subscription line in place for ECI Partners; and given Kurtosys a $5million recurring revenue line to support global expansion. So, for Easterby, the UK is still a compelling place to start and fund a fintech, not least because the nation’s fintech innovation ecosystem has some uniquely appealing features.

Among them is a strong rule of law and creditor process that together empower entrepreneurs to start businesses and access initial capital relatively easily. The sector also benefits from having a global financial hub in the City of London with the talent, resources and relationships to supply it with human capital. Having worked within large banks, would-be founders often draw on lived experience to develop fintech solutions their former employers can adopt. 

HSBC Innovation Banking itself works in partnership with HSBC Ventures to ‘spot strategic investments that we want to be part of’ says Easterby, with the aim of plugging that technology into the bank. He also sees the UK regulatory environment as an accelerator of growth, not a ball and chain on innovation.

“Everybody loves to complain about the regulator in all jurisdictions and the Financial Conduct Authority (FCA) is no different. But we do genuinely have a progressive regulator who wants to work with the market,” says Easterby.
He points out that, over the past 10 years, the FCA has actively engaged with innovators to be part of the journey – most notably via its world-first regulatory sandbox, launched in 2016, which has supported startups by accelerating their time to market, driven consumer and investor trust, and enabled the regulator to test and assess policies and products in real-time. A decade on, more than 90 per cent of firms that use FCA innovation services become fully authorised, and, critically, sandbox graduates are 50 per cent more likely to raise funding.

The big AI squeeze

With so many positives, then, and an overall buoyant investment market, what’s depressing the fintech figures? Ironically, it’s AI. Investors are increasingly concentrating capital into high-conviction, AI-driven companies with larger cheques across fewer deals. The HSBC Innovation Banking/Dealroom report shows that of the 837 UK rounds completed in H1 2026, 19 were AI megarounds. Four of these exceeded $1billion: Isomorphic Labs ($2.1billion), Nscale ($2billion), Wayve ($1.2billion) and Ineffable Intelligence, the frontier AI start-up founded by former Google DeepMind insider David Silver, which raised a startling $1.1billion at seed stage. These four alone sucked up 38 per cent of all capital deployed – an unheard of concentration of funds.
 AI is changing the rules of raising.

Paul Fifield, Operating Partner at Bessemer Venture Partners and four-time founder, told an HSBC Second Thoughts podcast in June: “To raise from the shrinking pool of capital as a non-AI company, you have to be exceptional.” Until recently, he explained, a fundraise would be a ‘slam-dunk’ if a company could achieve the ‘triple, triple, double, double, double’ or ‘T2D3’ growth rate. It’s a metric favoured by VCs looking for founders to map a convincing pathway to scale – by tripling their revenue for two years after reaching $1million ARR, and doubling it for another three consecutive years to reach $100million ARR. But AI companies have redefined the rules by condensing five years of growth into months.

“The likes of Lovable, Cursor, Anthropic, OpenAI... are ruining it for everyone else as they grow so fast,” said Fifield. “Lovable took eight months to reach $100million.”

Easterby speculates that the drop-off in fintech investment is a reflection of fintechs themselves reading the market and shifting their fundraising approach. Companies are ditching the ‘liquidity takes all mentality’, he says, to strategically raise funds for a clear purpose as capital consolidates. Meanwhile, some startups are deciding to forego the seed round entirely to focus instead on capital efficiency and generating self-sustaining revenue immediately.

More mature fintechs who have already banked investment, are also opting to self-fund the next stage of growth – as ClearBank has.

“Business models are beginning to get to that level of profitability, get to a mature corporate status – which is a good thing and we should be celebrating that,“ says Easterby.

The rock stars of tomorrow

With deals of more than $100million accounting for 68 per cent of total venture capital funding in the UK during H1 2026 and the remaining 32 per cent split between hundreds of smaller deals, there are, nevertheless, concerns about where this will all lead. A report by Innovate Finance and Boston Consulting Group with the Unicorn Council for UK FinTech, Accelerating The Unicorn Landscape In UK Fintech, has already identified a domestic investment gap at growth stage as one of the structural issues preventing UK fintechs from making the leap to global success. 

That’s not helped by VCs funnelling more and more capital into AI-first companies. The compliance hurdles that fintechs continue to encounter when entering the EU, limiting the rapid growth and market expansion that investors expect, is another problem. The report indicates that founders aren’t satisfied with the UK’s regulatory pace, either, which they say limits its ability to lead in areas such as stablecoins and digitalised capital markets. 
Many, it says, are being forced to look overseas for growth capital, including from US private equity houses and pension funds, which threatens to ‘shift the centre of gravity of these businesses away from the UK’. 

A place to start, scale and stay

The government’s five-year industrial strategy outlines its desire to ‘make the UK the most technologically advanced global financial centre’ by slashing red tape and driving more private capital into the sector. The British Business Bank (BBB), the UK’s economic development bank for innovative companies to ‘start-up, scale and stay’ in the UK, doubled its direct equity activity over nine months to June 2026, investing £600million into more than 50 scale-ups in AI, fintech, deeptech and life sciences, including £15million follow-in into regtech unicorn Quantexa via its commercial subsidiary British Patient Capital. 

The BBB is also administering the new £200million British Growth Partnership Fund 1, to channel institutional pension capital into high-growth UK scale-ups. Easterby is keeping a watchful eye on where those potential unicorns might be – specifically any supporting embedded finance and digital assets as around £300billion in intergenerational wealth passes from baby boomers to their digitally native offspring over the next 10 years.

“You’ll see wealth tech evolving,” predicts Easterby. “Digital assets are starting to become use cases that we can monetise. New fintechs that put those technologies front and centre will probably be the next breed of rock stars.”

How they fund their journey, however, remains to be seen.