Full-stack observability will help FSIs bounce back

One of the biggest headlines in financial services in 2023 was a string of service outages that affected some of Southeast Asia’s largest banks, suspending millions of payment and ATM transactions. The significant disruption to businesses and consumers was so extensive that the Monetary Authority of Singapore (MAS) intervened, directing one impacted bank to suspend any non-essential changes to its IT systems and to focus on enhancing their technology resilience.

With consumers expecting higher levels of digital interaction and access to services, alongside increased regulation and scrutiny from entities like MAS, Financial services industry (FSI) organisations face unparalleled challenges. They are tasked with modernising software and expanding digital infrastructure while ensuring optimal uptime, reliability, performance, customer experience, and innovation.

The need for visibility across increasingly complex tech stacks

FSI organisations typically have complex tech stacks and a wide range of integrations with middleware, cloud platforms as a service, and mainstream platforms. This complexity underscores the importance of gaining real-time visibility into every factor that could impact the customer experience.

It’s not surprising that organisations in the industry recognise the business value of observability and are increasingly investing in it, as highlighted in New Relic’s recent State of Observability for Financial Services and Insurance report. Compared to other industries, financial services and insurance organisations are 15% more likely to have achieved full-stack observability, with 38% attaining this level.

Observability provides real-time visibility into their infrastructure and software architecture, enabling organisations to develop customer-centric services and meet today’s expectations for an optimal digital customer experience (DCX). An easy and reliable connection across any device is crucial for day-to-day operations for all services, including selecting providers, quickly opening accounts, or even initiating a procedure online that they intend to complete in person.

Build customer trust by minimising downtime

As seen in the past year in Singapore and around the region, high-business-impact outages, such as those that affected our banks, while less frequent, tend to be more complex and therefore require more time and resources to resolve.

The New Relic report found that FSI organisations experienced fewer high-business-impact outages than many others, with 30% reporting these outages at least once a week compared to the average 32% among all respondents. Furthermore, their time to detect a high-business-impact outage was less than that of other industries.

However, the stakes are high. More than a third (35%) of financial services/insurance respondents indicated that critical business app outages cost more than US$500,000 per hour — which was higher than average and third highest overall compared to other industries — and 22% estimated these outages cost their organisations more than US$1 million an hour.

With financial services and insurance organisations more likely to invest in full-stack observability, their ability to respond to and resolve high-business-impact outages increases compared to those who have not achieved full-stack observability. Banks have traditionally maintained strong resiliency in their systems and a relatively slow pace of change and software developments, which supports their ability to manage these outages.

Once an organisation can proactively resolve and eliminate a large number of incidents with mature observability practices, they’re usually left with the more complex and unpredictable ones that take longer to resolve, even if they could detect them early and understand them quickly.

Level up your DCX

FSI organisations today are increasingly focused on customer-centric services and providing an optimal DCX. The New Relic report found that FSI organisations more widely deployed capabilities critical to their back end and core banking systems operations such as infrastructure monitoring and application performance monitoring.

Mature observability practices will enable FSI organisations to provide visibility through all the different parts of the technology stack to help IT teams troubleshoot any issues that may be degrading the digital experience for their customers. Customers don’t care if it’s your software or a third party causing an issue — they simply suffer from a substandard experience. No matter the cause, the dissatisfaction generated by these disappointing experiences reflects poorly on the business and erodes trust.

Traditional FSI organisations will face the ultimate test in Southeast Asia in 2024, as they race to recover from last year’s outages, along with the erosion of customer trust and regulatory intervention. Maintaining a laser-sharp focus on providing a great digital customer experience is crucial for these organisations to bounce back and unlock potential for future growth. By arming engineering teams with end-to-end visibility across complicated tech stacks, organisations can deliver a reliable, seamless customer experience ahead of the competition.