In the first nine months of 2016, China accounted for more than half of global fintech investment, the report said, adding that it was the only major region where fintech investment grew during 2016.
Compared to the first nine months of 2015, fintech investment in China for the corresponding period in 2016 doubled.
China took 46% of the worldwide share of venture capital invested in the first nine months of 2016; it had 19% in the corresponding period in 2015.
The report said of the 27 fintech unicorns (billion-dollar private companies), eight were born in China. While the US still had the largest number — with over half the list — the biggest fintech private companies by total value, as well as cumulative funding raised, were in China.
The two largest, Ant Financial and Lu.com, were valued at US$60 billion and US$18.5 billion respectively in their most recent private funding rounds.
The report attributed China's growth to high digital penetration combined with weak existing consumer/small and medium enterprises (SME) finance penetration; rapid growth in Internet users, especially mobile Internet; rapid growth in the middle class; and a light regulatory touch, at least initially.
It said rapid change was also a key characteristic that enabled the rise of Chinese fintech companies. "The rapid growth in Chinese Internet users is perhaps not a surprise relative to global peers, with penetration rising from only 16% of the population in 2007 to double that by 2010 (34%) and a similar percentage point increase (18ppt) likely to have taken place between 2010 and 2016.
"Interestingly, the growth rate of Chinese Internet users is now slowing. Two-thirds of urban China is already online and nearly everyone is using mobile."
The report said China's enormous e-commerce ecosystem was larger than that of any other country in the world in terms of gross transaction volume and it had "created a commerce and finance ecosystem outside the banking system, which had enabled and funded new payments and financial services companies, often linked to the new Internet giants".