In 2023, New Relic conducted a study to learn more about observability’s impact on businesses and the technical professionals behind them. The observability forecast surveyed professionals across numerous industries and geographic locations to better understand the current state of observability. Of the 1,700 tech practitioners and decision makers surveyed, 176 were associated with the financial and insurance industries.

This year, New Relic published the State of Observability for Financial Services and Insurance Report to share insights derived from the 2023 Observability Forecast on the adoption and business value of observability across the financial services industry (FSI) and insurance sectors.

Source: New Relic

Here are seven key takeaways from the report:

1. Observability is Critical to Top Technology Strategies and Trends

Companies are learning the importance of investing in observability, with 54% of financial and insurance organizations reporting that the need for observability stems from an increased focus on security, governance, risk, and compliance given the complex regulatory requirements in the industry. Other drivers included shifting to a multi-cloud environment (43%), adoption of artificial intelligence (AI) technologies (40%), and development of cloud-native application architectures (38%).

2. Observability Adoption is Gaining Momentum

To better manage complex offerings, 38% of financial institutions have already deployed full-stack observability. Financial services and insurance organizations have also widely adopted observability capabilities within backend monitoring, with 75% applying infrastructure monitoring and 63% utilizing application performance monitoring (APM). In the next two years, 93% of respondents expected to have deployed infrastructure monitoring, and 89% expected to have adopted APM.

3. Organizations Prefer a Unified View of their Tech Stacks

Financial and insurance companies aim to reduce the number of observability tools used with over half of respondents (52%) reporting a preference for a consolidated platform. However, 43% of respondents still considered their telemetry data siloed. With that said, 42% shared that their organization is likely to adopt a more consolidated approach for observability tools in the next year. Over the past year, the proportion of financial and insurance companies using a single tool has grown from .3% to 4.5% — a 15-fold increase.

4. Managing Outages and Decreasing Cost Requires Observability

Time is of the essence when resolving high-business-impact outages, with more than a third (35%) of financial services and insurance respondents reporting a loss of more than $500,000 per hour. Of the respondents who reported a mean time to detect (MTTD) of 30 minutes or less, 51% had adopted full-stack observability, and 64% of those who utilize full-stack observability said that mean time to resolve (MTTR) has improved.

5. Successful Tech Stack Monitoring Comes at a Cost

Respondents from financial and insurance organizations reported higher spending on observability tools than other industries, with nearly half (49%) spending $500,000 or more per year on observability, and 31% dishing out $1 million or more per year.

6. Observability Enhances Business Success

Organization values increased as a result of observability investments, with over half (52%) reporting more than $500,000, and 41% noting a total value of $1 million or more. Nearly half (47%) of IT decision makers said observability helps them to achieve business key performance indicators (KPIs), and 45% of practitioners reported increased productivity. Overall benefits of adopting an observability platform included improved system uptime and reliability (46%), increased operational efficiency (42%), and an improved real-user experience (31%).

7. The Future of Observability is Bright

Observability within the FSI and insurance industries will continue to rapidly grow in the coming years. An overwhelming majority of respondents (96%) expected to have deployed security monitoring in the next two years, followed by alerts and network monitoring (both 94%). In the next year, 42% said they planned to train staff on best practices for observability, and 43% predicted tool consolidation.