UK fintech investments have declined by over a third during the first half of 2020 compared to a year ago, according to data revealed by fintech regulator Innovate Finance.

In the first half of 2020, venture capital (VC) investments totalled $1.84bn across 167 deals as against $3bn invested into 263 startups in the prior year.

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This represents a 39% decline in the capital, the report added.

However, the VC investments in the first half of 2020 are up by 22% compared to the investments in the second half of 2019 which totalled $1.5bn.

The report also revealed that more than 50% of total funding went to five firms, with 47% of mega deals worth $100m.

This shows that the UK fintech sector continues to attract more investors as they grow.

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According to the report, Revolut, Checkout.com, Starling Bank and Onfido grabbed the top four mega deals and the fifth deal came from Thought Machine that raised $83m.

Also, a fifth of funding in the first half went to companies that raked in between $5-20m, including 35 fintechs that collectively raised over $376m.

Moreover, 87 companies raised up to $5m, representing 8% of the total investments in the first half of 2020.

Innovate Finance said the Covid-19 pandemic has led to quicker adoption of digital financial services and the “investor appetite” in fintechs has “not stopped”.

Innovate Finance CEO Charlotte Crosswell said: “We need to highlight the significant drop in the amount of capital raised during the first half of the year.

“This is particularly impacting startups, with a recent survey showing that 75% of smaller fintech firms are concerned about their next funding round.

“Whilst early-stage conversations suggest capital is ready and waiting to be invested, there is still a lag in actual funding. It is yet to be seen if the rest of 2020 sees a pickup in activity.”