FinTech: Funding Trends and Focus
FinTech investment has softened sharply in 2024. KPMG reports that global fintech funding fell from $119.8 billion in 2023 to $95.6 billion in 2024, the lowest since 2017. Europe’s FinTech funding share is also down; EMEA (Europe/Middle East/Africa) took only $20.3 billion of fintech investment in 2024. These declines reflect broad economic headwinds (high interest rates, inflation and uncertainty), but industry analysts note a shift in investor interest. As one Sifted analysis observes, fintech “often plays second fiddle to sectors it once bested” – deal counts in fintech trails those in areas like HealthTech and even B2B SaaS. In Q1 2025 Europe, fintech saw only 164 deals, far fewer than the 352 deals in the B2B software sector, as “investors opt to allocate capital to nouveau buzzy sectors such as AI, ClimateTech and HealthTech”.
Meanwhile, in the UK FinTech labour market, the AI surge is very visible. A report by Morgan McKinley finds a 44% jump in fintech job vacancies in 2024, attributing this to strong VC investment and AI projects in finance. It notes that “increased investment in AI, political shifts in the UK and falling interest rates has made 2024 a pivotal year for the finance sector”, with AI/ML investment in financial services up 98% year-on-year. In other words, FinTech today is increasingly “a magnet for talent,” driven by AI and automation projects.
These trends suggest a bifurcation: FinTech firms with AI-focused or data-intensive offerings are attracting the bulk of new capital, while more “traditional” or non-tech-centric startups face a tougher funding environment. As one UK report puts it, FinTech’s recovery in 2024 was driven largely by mega-deals and AI-enabled ventures, whereas smaller fintechs struggled to raise rounds at pre-2021 valuations. That said, some industry leaders argue AI will complement – not replace – core FinTech business models. For example, one observer notes that B2B fintech enjoys a “defencible position” because AI can “enhance processes but can’t replace the core offering,” and that AI-driven personalisation and open-finance trends are unlocking new B2B opportunities. In summary, FinTech funding is down overall (especially outside the largest AI-driven or regulated segments), and observers are indeed seeing investor excitement shift toward AI (and other hot sectors) at the expense of some traditional fintech niches.
EnergyTech (CleanTech / Renewables): Investment Landscape
Clean energy and renewables startups also saw cooling investment in 2024, even as global attention to decarbonisation grows. Globally, venture funding into clean energy declined about 6% in 2023 – much smaller than the 38% drop in overall VC, but still notable. In Europe and North America, the pullback was steeper: Oliver Wyman reports that VC funding for sustainable energy plunged 29% in Europe and 21% in North America in 2023. In the UK, clean- and green-tech funding collapsed – Beauhurst data shows UK green/clean tech investment fell 44% in 2024 to just £1.1 billion, after a 20% drop in 2023. These sharp declines are not explained by economics alone. Analysts explicitly cite the “lure of AI” drawing VC capital away from climate and energy startups. In Oliver Wyman’s view, the AI 1 1 2 3 4 5 6 7 8 5 9 3 5 10 11 12 1 frenzy “dampened the fervour for sustainable energy” among VCs, even as data centres and AI compute demand surge.
Industry experts note the irony: AI’s growth increases energy demand (pushing for data centre build-out), yet many AI investors have prioritised novel software or compute hardware ventures over renewable energy innovations. Bill Janeway (economist and VC) warns that this is typical herd mentality: whenever a new technology with broad promise emerges, VCs rush in but “nobody knows yet [which] will prove to be sustainable” long-term. In the energy context, that means vital non-AI solutions (like advanced storage, grid modernisation or next-gen turbines) may be under-supported if investors over-allocated to AI-centric projects (even if AI could help optimize the grid in theory).
In short, both UK and EU experts are sounding alarms about an “investment gap” in traditional EnergyTech: despite urgent climate goals, funding for renewables and energy innovation is often flat or shrinking. For example, UK analysts highlight that 2024 was the hottest year on record – yet investment in green tech is falling to multi-year lows. Such trends have raised concerns at policy tables: regulators and industry groups in Europe continue to push for dedicated funding and favourable policy for clean energy startups, precisely because AI hype alone won’t meet net-zero targets. (That is one reason the EU and UK governments have simultaneously announced large AI funding packages and separate green innovation funds.) However, as of 2024 the imbalance is clear: AI-related ventures are attracting more attention and capital than many traditional climate-tech solutions.
Comparative Investment Flows and Innovation Patterns
To summarize key shifts in 2023–2024:
- FinTech (Global VC) – Fell from $119.8B in 2023 to $95.6B in 2024 (–20%) . UK/EU fintech similarly saw large drops in deal count and value. (Decline was driven by macro factors, but also by a relative shift to “hot” sectors like AI).
- FinTech (UK Jobs) – FinTech job openings in the UK +44% in 2024, largely AI-driven. (FinTech is hiring strongly, but mostly for AI/data roles rather than legacy fintech operations.)
- Cleantech (EU VC) – Europe’s clean energy VC funding was down 29% in 2023.
- GreenTech (UK VC) – UK green/clean tech funding fell from £2.4B (peak in 2022) to £1.1B in 2024 (–54% from 2022) .
- AI Startups (Global VC) – VC funding for AI-focused companies jumped from ~$86B in 2023 to $131.5B in 2024 (about +52%), capturing over half of global VC dollars in late 2024.
These contrasts are striking. While global VC sunk in nearly all sectors, AI startups bucked the trend, soaking up a disproportionate share of capital. In Europe especially, this meant less attention for both FinTechs and clean-energy firms that are not AI-centric.
| Sector / Category | 2023 | 2024 | Change (YOY) | Source
|
| Global FinTech (VC funding) | $119.8 billion | $95.6 billion | –20% | KPMG |
| UK FinTech (job vacancies) | +44% | (AI-driven surge) | Morgan McKinley | |
| EU Cleantech (VC funding) | –29% | (2022→23 decline) | Oliver Wyman | |
| UK Green/Clean Tech (VC) | £2.4 billion (2022) | £1.1 billion | –54% (2022→24) | PriceBailey (Beauhurst) |
| Global AI Startups (VC) | +52% | (2023→24 gain) | PitchBook |
Expert Views and Concerns
Industry analysts and leaders are openly debating whether the AI wave is healthy or hazardous for broader innovation. Many note the phenomenon of “AI washing” – companies rebranding themselves as AI-based to chase investment – which echoes past tech bubbles. Economist Bill Janeway sums up a common warning: “the concentration of investment into AI is a reflection of the herd mentality typical of the VC industry,” and “nobody knows yet [which] will prove to be sustainable” . In other words, heavy funding now for AI could be misallocated if the promised breakthroughs don’t materialise quickly.
On the energy side, Oliver Wyman’s Thomas Fritz et al. bluntly observe that “the lure of AI startups… dampened the excitement for sustainable energy” among VCs. Other analysts similarly caution that neglecting non-AI clean tech innovation could slow the energy transition. For example, one UK report highlights that funding for battery storage and grid tech plunged, jeopardising progress even as climate risks grow (the 1.5°C warming target was breached in 2024) . They argue Europe must protect climate-tech funding instead of letting it be “crowded out” by AI hype.
By contrast, some FinTech veterans are upbeat, noting that AI can strengthen traditional fintech. As one FinTech founder puts it, embedded finance and AI-driven personalisation are fuelling B2B fintech growth, and “AI can enhance processes but can’t replace the core offering”. This view holds that FinTech companies (e.g. payments platforms, banking APIs) still control valuable infrastructure that only gains from smarter data tools. Even so, the broader concern remains, start-ups or projects with no clear AI angle may struggle to raise money, regardless of their potential utility. For example, one trading focused fintech noted that investors now largely expect AI/ML features before funding new solutions.
Conclusions
In summary, there is mounting evidence that AI’s meteoric rise in 2024 has coincided with a slowdown in “traditional” innovation funding in both FinTech and EnergyTech. AI-centric ventures have captured a growing share of venture capital (over half of VC dollars by late 2024), and many industry observers see this as diverting attention from other areas. FinTech as a whole saw funding decline (–20% globally), and analysts note capital shifted to “buzzy” sectors (AI, climate, health). Similarly, European renewable/energy tech funding has fallen sharply (–29% in one year), at a time when extra investment is needed to meet climate goals. Several expert reports explicitly link these trends: AI is soaking up scarce funding, even as the real-world impacts of clean-tech innovations are arguably more immediate.
That said, general macroeconomic headwinds (higher interest rates, geopolitical uncertainty) have also depressed investment across all sectors. It is difficult to fully disentangle AI hype from these forces. Nevertheless, the consensus among analysts quoted here is that AI is overhyped relative to near-term returns – a “great investment bubble” according to some – and its glamour may indeed be stifling alternative innovation. If so, policymakers and investors worry that underfunded non-AI solutions (in areas like climate tech, trading infrastructure, B2B finance tools, etc.) could slow progress in those fields. As one commentator warns, chasing every AI miracle may mean neglecting other breakthroughs that the economy and environment urgently need.
Sources
Industry reports and analyses from 2024–2025, including KPMG’s Pulse of Fintech, Sifted and Tech.eu fintech surveys, UK FinTech employment studies, Oliver Wyman clean-tech research, and expert commentary (e.g. Bill Janeway). These sources highlight investment and innovation trends in UK/EU FinTech and EnergyTech, with relevant global context.
Global fintech investment falls to seven-year low of $95.6 billion in 2024 https://kpmg.com/xx/en/media/press-releases/2025/02/global-fintech-investment-falls-to-seven-year-low.html
Europe’s most active fintech investors in Q1 | Sifted https://sifted.eu/articles/europes-most-active-fintech-investors-vcs-q1
AI and investment trends are reshaping UK fintech jobs – Maddyness UK https://www.maddyness.com/uk/2025/02/11/ai-and-investment-trends-are-reshaping-uk-fintech-jobs/
What’s next for European fintech? Eight predictions for 2025 | Sifted https://sifted.eu/articles/whats-next-for-european-fintech-eight-predictions-for-2025 Venture Capital Funding For Clean Energy Startups Cools https://www.oliverwyman.com/our-expertise/insights/2024/jul/global-venture-capital-trends-in-clean-energy.html
UK investment in green and clean tech drops by 44% in 2024 | Price Bailey Chartered Accountants https://www.pricebailey.co.uk/reports/uk-green-tech-investment-decline/ fDi Intelligence – Your source for foreign direct investment information
fDiIntelligence.com https://www.fdiintelligence.com/content/41641e67-f00f-53c0-97cb-464b3a883062
