Most major financial companies plan to increase partnerships with technology specialists over the next few years, a new report has revealed.

Professional services firm PwC found that 82 per cent of global banks, insurers and investment managers expected to work more with financial technology companies over the next three to five years.

And business chiefs expect to see a 20 per cent average return on investment on their technology projects.

The report also found that funding in blockchain companies by financial services companies increased by a massive 79 per cent year on year in 2016 to $450 million worldwide.

And PwC said that regulators in the sector would have an important role to play in encouraging the financial services industry “over the starting line in implementing blockchain”.

Arthur Wightman, PwC Bermuda territory and insurance leader, said: “Fintech collaboration, and innovation more widely, is not about jumping on the latest bandwagon — it’s about finding the best, most efficient way to carry out your business strategy and ultimately better serve your customers.”

He added: “PwC’s report finds that the growing sophistication of models and analytics to better identify and quantify risk is seen as the most important trend and the one to which the market is the most likely to respond.

“For this reason, insurers are embracing innovation with a focus on data analytics and 84 per cent are planning to invest in it this year.” The survey, which talked to 1,300 respondents around the world, said that a driving factor in the rush to adopt new technology was a fear that revenue was at risk from stand-alone fintech companies, with 88 per cent seeing that as a real threat.

On average, up to 24 per cent of revenue is thought to be at risk.

Blockchain — a computer file underlying a mutual distributed ledger where blocks of information added in sequence cannot be changed or deleted — is regarded as having huge potential in financial services.

Banking is expected to be the “epicentre of disruption” over the next five years, according to 80 per cent of the respondents.

Bankers see personal loans and personal finance most at risk of moving to a fintech company.

Matthew Clarke, PwC Bermuda partner in banking, said: “The focus on innovative product design, ease of use, 24/7 accessibility and faster services are seen as important initiatives to address customer retention.

“Bankers also see the rise of fintech as an opportunity to expand products and services and are increasingly turning to fintech companies to engage in partnerships and buy their services.”