Digital customer experience driving tech-stack complexity

Whether paying a bill, checking bank balances, making a purchase, or getting a quote for a new product or service, today’s consumer has high expectations for quality digital engagement with financial services and insurance organizations. That is why these organizations are investing heavily in core system transformation so they can deliver digital-first models that meet their customers’ demands and help them remain competitive — all while meeting ever-evolving industry regulations.

Of course, a byproduct of all this modernization is the creation of increasingly complex tech stacks and application integrations — subsequently requiring end-to-end visibility into it all. For this, the financial services industry (FSI) and insurance organizations are turning to full-stack observability platforms, which help their engineers ensure uptime, compliance, and overall system health in the name of digital customer experience.

The shift toward observability tools

With their competitive edge on the line, FSI and insurance organizations are rapidly shedding their legacy core systems in favor of technologies that support better digital customer experiences. Specifically, according to “The State of Observability for Financial Services and Insurance Report,” these institutions are migrating to multi-cloud environments (43%); investing in AI (40%); adopting customer experience management (35%); and focusing on security, governance, risk and compliance (54%). But with each system or integration added, their tech stacks become more complicated. And, should an outage or service problem occur, finding its origin in such a complicated tech stack could delay the fix, ultimately compromising customer experience.

To gain visibility into the health of their complicated tech stack, many FSI and insurance organizations employ monitoring tools — often, separate tools for monitoring infrastructure, logs, asset performance management, and so on. The report found that in 2022, the average number of tools used was six. But in terms of cost and ease of use and management, consolidating these tools into a single observability platform is ideal, and an increasing number of organizations would agree: Since last year, the number of organizations standardizing on a single platform for full-stack observability has increased by 15x. Indeed, the prevailing preference among 52% of respondents was for a single observability platform.

Wide-ranging business case for full-stack observability

While the FSI and insurance industries have the fifth-lowest outage frequency as compared with other industries, the outages they do sustain tend to be more complex and, therefore, take longer to resolve and have a greater impact on productivity and business. The report noted that more than one-third of FSI and insurance respondents said these outages can cost more than $500,000 an hour; 22% estimated that number was closer to $1 million an hour.

Those FSI and insurance organizations with full-stack observability, however, were more likely to report faster mean time-to-detect (MTTD) for high-impact outages than those that don’t have full-stack observability. And, despite a relatively high mean time-to-resolve (MTTR) among organizations surveyed, 64% said their MTTR has improved since adopting an observability tool.

Drilling down a bit reveals the specific ways full-stack observability supports its users — all ultimately contributing to improved digital customer experience and overall business value. For example, IT decision-makers noted that full-stack observability helps achieve business KPIs (47%) and technical KPIs (43%). For practitioners, 45% said full-stack observability increases productivity so they can find and resolve issues faster and 36% said it makes their job easier overall. And 39% of respondents said that full-stack observability improves customer retention by enhancing their understanding of customer behaviors. Improved uptime and reliability (46%), increased operational efficiency (42%), improved user experience (31%) and security vulnerability management (30%) round out the cited beneficial impact of observability.

In all, 52% of respondents said the total value observability brings to their organization is more than $500,000, and one-fifth of respondents put that estimate at $5 million or more per year.

Final thoughts

As FSI and insurance organizations continue to fine-tune their digital customer experience strategies and invest in new technologies to support them, observability emerges as a critical component for end-to-end visibility across complicated tech stacks. Not only will this visibility ensure less downtime and greater operational efficiencies, but it will also support the kind of seamless digital customer experience that is so critical to market leadership.