The money has shifted to Asia.
The researchers attribute the power shift to the rise of what they term “Chinese dragons,” an industry term for the biggest upstarts in Asia. Think of Ant Financial, the payments spinout of Alibaba baba , as well as Lu.com, JD Finance, and Qufenqi, emerging eastern juggernauts that are generally less familiar to consumers in the west.
As the report’s authors summed up 2016: “The Chinese dragons roared and some previously feted FinTech leaders wilted.” (You can read more about Citi’s own efforts to embrace fintech in this Fortune feature from June 2016.)
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China accounted for more than half of all fintech investments globally in the first nine months of last year, the report said. Specifically in terms of venture capital, the country more than doubled its worldwide share of the investment category, rising to 46% of the global total versus just 19% the same period in 2015.
The U.S., meanwhile, sunk to 41% of the global total from 56% during the same period in 2015, putting it behind China.
A number of factors have placed China at the forefront of financial innovation in recent months.
First, mishaps at fintech upstarts in the Unites States have cooled investor enthusiasm in the private markets there. Once-soaring firms such as Zenefits, Lending Club, OnDeck, and others, have run afoul of regulation, struggled to meet expectations, or both.
In China, the biggest fintech accelerants involve the concurrent explosion of Internet connectivity through mobile devices and the rise of a middle class. This revolution has created an opening for new businesses, filling a void left by incumbent financial firms, which are more accustomed to working with state-owned entities than ordinary consumers.
It also helps that China has “light regulatory touch, at least initially,” per the report.
While the U.S. still boasts more fintech “unicorns,” startups valued at $1 billion or more, the concentration of wealth is greater in China. The dragons are lately raising more funding per round and achieving larger private valuations than their western kin.
For more on unicorns, watch:
For instance, Lu.com, JD Finance, and Qufenqi raised rounds of $1.2 billion, $1.0 billion, and $0.45 billion respectively last year, making them the global fundraising leaders in fintech.
Furthermore, no unicorns even come close to touching Ant Financial’s private valuation of $60 billion. (San Francisco-based Stripe is the U.S.’ highest valued fintech unicorn, leaping to a private valuation of $9 billion from $5 billion only after a November raise, which fell outside the purview of the report’s nine month period.)
Another difference? Whereas fintech upstarts in the U.S. and elsewhere have been picking off niche areas of to specialize in (e.g. lending, insurance, and wealth management), the Chinese giants are taking a broader approach to build “one-stop financial shops.”