The cash being ploughed into the UK's fintech startups dwindled by a third in 2016, falling under the $1bn mark due to the uncertainty surrounding Brexit - but the country grasped on to its position as the third most attractive country in the world for venture capital investors in the sector.
Funding also fell for US fintech startups in similarly tumultuous political times, allowing China to leapfrog it for the first time and claim the top spot.
The data from industry body Innovate Finance and Pitchbook found $783m went into UK fintech startups, a decline of 34 per cent, while similar investment in the US fell 13 per cent to $6.2bn.
Investment in China rocketed 84 percent to $7.7bn, with figures indicating far fewer but larger deals than other countries and bolstered by a mammoth $4.5bn for Alibaba's finance offshoot Ant Financial.
Fintech special envoy Eileen Burbidge warned a fortnight ago that fintech firms should be looking over their shoulder at the rise of Asia as a fintech powerhouse.
Meanwhile globally, an uptick of 11 percent helped investment hit $17.4bn across the board in 2016.
A post-Brexit splurge in the third quarter after investors had held off from deals in the second had indicated a certain amount of resilience in the UK, but that failed to make up for earlier hesitance and did not continue into the final quarter.
"We didn't have a great year," admitted Innovate Finance chief executive Lawrence Wintermeyer, speaking to City A.M.
"We think the overall figures for the year are disappointing, but we've been given rational explanation from the industry. There is global uncertainty, and there's more uncertainty around financial services in the UK than fintech. We still came in third"
The group, which represents hundreds of businesses, remains cautious for 2017 but identified several promising factors which it hopes will restore momentum.
"Some of the uncertainty around Brexit has been removed with the UK government’s focus on leaving the single market and developing global trade," said Wintermeyer.
"Innovate Finance welcomes the Prime Minister’s commitment to maintaining the UKs position as the preeminent global financial services centre and to ensuring the UK remains a magnet for global talent."
Some in the UK tech industry have also pointed toward the UK benefiting from the uncertainty of the Trump administration.
Read the original article on City AM. Copyright 2017 Via: http://uk.businessinsider.com/brexit-bites-uk-fintech-as-funding-falls-by-34-in-2016-2017-2