Fintech funding remained active in Europe in H1 2026, but capital was selective and focused on a limited set of scale assets and category leaders. As the second half of the year unfolds, regulation will continue to be a significant catalyst for fintech funding, with several rules expected to drive demand for compliant infrastructure and governance frameworks, leading to increased funding across the regtech, digital assets, and payments verticals, according to a new report by SBI Ventures Europe.
The report, released in August 2026, looks at the state of Europe’s fintech landscape, analyzing funding activity and trends across verticals and countries. It also offers an outlook for the future of the industry.
The report highlights the increasingly complex regulatory landscape in Europe, which is reshaping the fintech industry. Key regulations include the Markets in Crypto-Assets (MiCA) regulation, the Instant Payments Regulation (IPR), the Digital Operational Resilience Act (DORA), the Financial Data Access (FiDA) regulation, the new Anti-Money Laundering Authority (AMLA) framework and the AML rules, and the Artificial Intelligence (AI) Act.
These recent rules regulations are setting the stage for continued growth in several fintech categories, particularly regtech, digital assets, and payments and account-to-account (A2A) services. These verticals are expected to be the most profitable, and sought-after, and they will drive most of fintech activity through 2028.
Regtech
Regtech emerged as a prominent theme in H1 2026. During this period, European regtech startups secured a substantial investment of US$501 million. Despite a decline in deal counts by 19% year-over-year (YoY), the median deal size experienced a remarkable growth of 128% YoY, reaching US$4.1 million. This significant increase in the median deal size stands out as the most substantial growth among all sectors in H1 2026, indicating the emergence of larger deals.
The focus of this growth was on startups are addressing key challenges in the regulatory landscape, particularly in the areas of identity management, fraud detection, transaction monitoring, and compliance tools.
Driving this was the new Anti-Money Laundering Authority (AMLA) and the AML Regulation (AMLR), which establish the most stringent buying deadline. The new AMLR introduces more uniform AML and know-your-customer (KYC) requirements across Europe. Banks, payment firms and Crypto-Asset Service Providers (CASPs) must comply with the EU AML rulebook from July 10, 2027.
Another key piece of regulation is IPR, which requires banks and payment providers across Europe to offer euro-denominated instant credit transfers 24/7 at a cost no higher than standard traditional bank transfers, and which introduces verification of payee to reduce fraud.
Euro-area banks were required to be capable of receiving and sending instant payments by the end of 2025. For non-euro EU countries, the main deadlines are January 09, 2027, for receiving payments, and July 09, 2027, for sending and payee verification. All electronic money institutions and payment institutions must be fully compliant with IPR by July 09, 2027.
IPR raises real-time fraud pressure, supporting demand for monitoring, verification and case-management infrastructure.
Digital assets
Digital assets and stablecoins were another key investment theme in H1 2026, with companies in the space securing US$484 million during the period. Similar to regtech, the number of deals declined 6% YoY to 65, but the median deal size nearly doubled, rising 96% YoY to US$5.5 million.
In H1 2026, investors prioritized blockchain-based infrastructure for custody, settlement, stablecoins, and tokenized assets, rather than speculative retail-facing ventures. This focus stemmed from the implementation of MiCA regulation, which shifted the market toward licensed providers and turned regulatory readiness into a commercial advantage rather than merely a compliance cost.
MiCA is a comprehensive legal framework that regulates the crypto-asset market in the EU. It sets uniform rules for issuers of crypto-assets and crypto-asset service providers (CASPs) across all member states.
MiCA’s main regime applied from December 30, 2024, and the transition for existing crypto service providers ended across the EU on July 01, 2026.
Payments and A2A
Another key investment theme in H1 2026 was payments and A2A transactions. These startups raised US$354 million during the period, with deal counts declining 28% to 46 transactions while the median deal size rose 90% YoY to US$5.7 million.
The primary focus of these investments was on infrastructure related to payment processing, orchestration, and verification. Notably, 80% of the disclosed capital in H1 2026 was allocated to rail operators and settlement infrastructure.
Similarly to regtech, the surge in investments in the payments and A2A sectors was primarily driven by IPR, which created a sense of urgency around fraud monitoring, payee verification, and real-time risk controls.
As agentic payments scale, one emerging area of interest is know-your-agent (KYA). This category encompasses practices and frameworks for identifying, verifying, and understanding AI agents that interact with systems, services, or other agents, similarly to know-your-customer (KYC) compliance in finance.
Fintech funding in Europe
In H1 2026, European fintech startups raised US$5.74 billion in funding, up 21% YoY. However, the number of deals declined by 36% YoY, reaching a total of 383 transactions. This decline contributed to a rise in the median deal size to US$4.2 million, reflecting a concentration into fewer, larger investments.
During the period, France emerged as the country with the most prominent deals, securing the three largest rounds of funding. Alan, an insurtech startup, secured the largest round of H1 2026, raising a US$550 million Series G. Pennylane, a financial management and accounting platform, followed closely, raising a US$200 million Series E. Morpho, a decentralized finance protocol, secured the third-largest round, raising a US$175 million Series C.
Investors adopted a more selective approach, pulling back from lending, banking infrastructure, and insurtech. Lending experienced a notable decline, with deals dropping by 69% YoY to just 24 transactions. Banking infrastructure also saw a decrease, falling from 31 deals in H1 2025 to 14 deals in H1 2026. Insurtech also faced a significant downturn, with deals declining by 42% YoY to 38 transactions.
While the UK remained the top recipient, securing 151 transactions, that number is down 26% YoY. The deepest deal flows were across fintech infrastructure, lending data, regtech and digital assets.
Besides the UK, other major jurisdictions also experienced declines in funding. France saw a 37% YoY decrease in the number of fintech deals, while Sweden experienced a 56% YoY decline. In France, the focus of deals was on the CFO stack, decentralized finance (DeFi), and insurtech. In Sweden and the broader Nordic region, deals primarily targeted payment, open banking, spend management, and SME software.
In contrast to these countries, Southern Europe saw a surge in fintech funding activity. In H1 2026, deal counts rose 22% and 12% YoY, in Spain and Italy, respectively, driven by small and medium-sized enterprise (SME) finance, payments, insurtech and embedded finance infrastructure.
Featured image: Edited by Fintech News Switzerland, based on image by muhagraph via Magnific
