New Relic published its State of Observability for Financial Services and Insurance report, which offers insights into the adoption and business value of observability for the financial services and insurance industry. The report, based on insights from financial services and insurance industry professionals surveyed in New Relic's 2024 Observability Forecast, illustrates that artificial intelligence (AI) is core to observability practices, with some 41% of respondents reporting AI adoption as a core driver of observability.

"Financial services and insurance organizations are navigating a fast-moving digital landscape where reliability, security, and operational efficiency are non-negotiable," said New Relic Chief Technical Strategist Nic Benders. "These businesses grapple with frequent high-impact outages, complex tool sprawl, and mounting regulatory pressures, all while striving to deliver seamless digital experiences. The report's findings demonstrate how critical observability is in helping businesses reduce costly downtime, leveraging AI, and modernizing legacy systems to meet rising customer expectations while maintaining compliance. Observability is no longer just a technical practice; it is mission critical."

Financial modernization and AI adoption are key priorities

Financial modernization was highlighted as a top priority of the research, with institutions migrating to the cloud, investing in digital-native subsidiaries, and adopting cutting-edge technologies like AI. Observability plays a significant role in these transformations, with 34% of respondents citing AI-assisted troubleshooting as crucial to improving observability practices. Additionally, 42% reported ambitions to consolidate tools in the coming year to address challenges like tool sprawl and data silos.

Organizations in the financial services and insurance sectors are also ahead of other industries in cloud-native application development (36% adoption compared to 31% across all industries) and containerized workloads (28% versus 23% overall). These modern technology strategies, combined with robust observability solutions, empower businesses to remain agile and competitive in an increasingly digital-first world.

AI adoption also accelerates observability adoption, with respondents highlighting automatic root cause analysis (32%) and AI-assisted remediation actions (32%) as key opportunities to strengthen their practice.

Financial and reputational outage risks require intelligent observability

Despite advances in technology adoption, financial services and insurance organizations face significant hurdles, including frequent outages, fragmented data, and the rising costs of downtime. The report reveals that these companies experience high-business-impact outages more often than most industries, with nearly half (48%) reporting at least one such incident weekly. The median cost of downtime for these outages in this sector is $2.2 million per hour; 16% higher than the average across all industries.

Detecting and resolving outages remains a challenge, with the median mean time to detection (MTTD) at 42 minutes, and mean time to resolution (MTTR) at 58 minutes; both higher than industry-wide averages. However, those leveraging full-stack observability experience faster detection and resolution times, underscoring its value in mitigating the financial and reputational risks of outages.

Tool consolidation creates value, as observability ensures strong ROI and system uptime

Nearly half (49%) of respondents preferred a single observability platform to simplify operations and extract greater value from investments. By consolidating tools, businesses can overcome common barriers like data silos and achieve end-to-end visibility across their tech stack.

Financial services and insurance organizations report significant return on investment (ROI) from their observability investments, with a median annual return of 297%. These tools enable companies to reduce downtime, increase operational efficiencies, and enhance customer experiences by ensuring systems remain fast, reliable, and secure.

Nearly half of respondents (49%) say observability improves system uptime, while 42% point to operational efficiency gains. In particular, practitioners see observability as a productivity booster, which helps them troubleshoot faster and manage complex infrastructures with less guesswork.

"Customers must have a digital experience with high performance, usability, and accessibility. New Relic is the main tool today for internal decision-making. Not only technology decisions-but also strategic decisions," Carlos Pedrosa, IT Director at Banco Inter.