New Relic has released its latest industry-specific study, the State of Observability for Financial Services and Insurance report, revealing that organisations in the financial sector are incurring costs of up to US$2.2 million per hour due to high-business-impact outages. The report highlights the urgency of adopting intelligent observability solutions, particularly those powered by artificial intelligence (AI), to modernise systems and reduce downtime.
The findings are based on New Relic’s 2024 Observability Forecast, which surveyed professionals from financial services and insurance sectors across the globe. Nearly half (48%) of respondents reported experiencing significant outages at least once a week, with AI adoption playing a central role in driving interest in observability platforms.
AI as a driver for digital transformation
The research found that financial services and insurance institutions are prioritising modernisation, with strong momentum towards cloud migration, digital-native business units, and AI adoption. Observability is becoming an essential part of this evolution, especially as companies aim to consolidate their tools and address issues like tool sprawl and data silos.
According to the report, 34% of respondents consider AI-assisted troubleshooting as a key component in improving observability, while 42% are planning tool consolidation within the next 12 months. Respondents from these sectors also outpace other industries in areas like cloud-native application development (36% versus 31% industry-wide) and containerisation (28% compared to 23%).
AI is not just a supporting feature but a core enabler of observability, with 32% of participants pointing to automatic root cause analysis and AI-assisted remediation as essential for strengthening their capabilities.
Observability helps reduce risk and increase resilience
Despite these advancements, financial institutions continue to face high levels of disruption. The study found that the sector suffers more frequent high-impact outages than most other industries, with a reported median cost of US$2.2 million per hour—16% above the cross-industry average. Additionally, the median time to detect such incidents (42 minutes) and to resolve them (58 minutes) remain high.
However, the use of full-stack observability tools significantly shortens both detection and resolution times, demonstrating their importance in preventing financial and reputational damage. The data also supports the notion that observability is no longer a technical nice-to-have, but a strategic business requirement.
“Financial services and insurance organisations are navigating a fast-moving digital landscape where reliability, security, and operational efficiency are non-negotiable,” said Nic Benders, Chief Technical Strategist at New Relic. “The report’s findings demonstrate how critical observability is in helping businesses reduce costly downtime, leveraging AI, and modernising legacy systems to meet rising customer expectations while maintaining compliance. Observability is no longer just a technical practice; it is mission critical.”
Simon Lee, Senior Vice President and Managing Director for Asia Pacific and Japan at New Relic, added: “A US$2.2 million-per-hour impact shows just how quickly disruption can hit — especially for financial services and insurance companies operating in complex digital ecosystems. Across APAC, firms are under growing pressure to modernise their observability strategies and move faster to prevent downtime before it impacts customers.”
ROI and operational efficiency improvements
The report also shows that observability tools deliver clear business value. Nearly half of respondents (49%) said they preferred using a single observability platform to streamline operations and enhance visibility across their systems. Those using unified platforms reported stronger returns on investment and improved system uptime.
The median annual ROI on observability tools for financial services and insurance companies was reported at 297%. Observability contributes directly to operational efficiency, with 49% of those surveyed saying it improves uptime and 42% highlighting increased operational performance. By eliminating guesswork in incident management and enabling faster troubleshooting, observability helps teams manage complex infrastructure more effectively.
Carlos Pedrosa, IT Director at Banco Inter, noted the strategic role observability plays in decision-making: “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.”
