BIZTECH: What are the benefits of observability for financial institutions?
LEFFLER: Today’s banking customers expect an always-available digital experience that gives them seamless access to their money whenever they need it, and if they don’t get it from you, there’s a competitor only a tap away. A strong observability practice helps banks stay ahead of the costly outages and performance issues that can disrupt customer trust and experience.
With a comprehensive observability practice, banks also gain a stronger resilience posture — enabling teams to identify, respond to and recover from incidents faster. They also are able to prioritize IT response. It’s impossible to respond to everything at the same time. Using observability lets banks prioritize response based on business impact. Leading organizations are already seeing the impact: According to Splunk’s 2025 State of Observability Report, 65% of practitioners say their observability practice is positively impacting revenue. As digital banking expectations continue to rise, observability is becoming a critical business driver, not just an IT function.
BIZTECH: What are some common obstacles financial services institutions face related to observability?
LEFFLER: A challenge that financial services institutions may face is tool sprawl. Many organizations operate across a mix of on-premises and cloud environments, often relying on separate monitoring and observability tools for each. This creates fragmented visibility and makes it difficult to gain a unified view of the entire IT environment, or to prioritize issues based on the impact they have to the bottom line. Overcoming tool sprawl starts with consolidating data and workflows into a centralized observability strategy that can provide consistent visibility across systems, regardless of where applications or infrastructure reside.
Another common issue is alert fatigue. IT teams are often overwhelmed by large volumes of alerts, many of which may not be critical, increasing the risk that high-priority issues get overlooked. With an AI-powered comprehensive observability practice, banks can unify visibility across environments and use intelligent automation to help surface and prioritize the alerts that matter most to the business.
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BIZTECH: What are some best practices for establishing an observability practice at an FSI?
LEFFLER: There is no one-size-fits-all approach to observability for financial services institutions. Leaders need to implement an observability practice and strategy that best fits the unique needs and complexity of their business.
That said, in general, teams should standardize on OpenTelemetry to create a vendor-neutral foundation that supports visibility across increasingly complex hybrid IT environments. This not only improves interoperability across tools and teams but also helps streamline operations and improve customer outcomes. It also makes sure that the instrumentation work only needs to be done once, enabling FSIs to choose the right observability tooling without the concern of vendor lock-in.
Reducing alert noise is another critical priority. Too many low-value alerts can overwhelm IT teams and contribute to alert fatigue, making it harder to quickly identify and respond to the issues that matter most. By prioritizing high-impact alerts, institutions can maximize IT resources and give teams more time to focus on strategic initiatives instead of reactive troubleshooting. FSIs must adopt tooling that can tie alerts to business impact and use this data to prioritize response and reduce the effects of alert fatigue.
Finally, financial institutions should take a deliberate approach to introducing AI into their observability practice. Starting with lower-risk use cases — such as alert triage, correlation and root cause analysis — allows teams to build trust in AI over time. When implemented thoughtfully, AI can help empower IT teams with faster insights and greater efficiency, enabling them to operate more proactively and resiliently. There are many concerns around AI usage, especially in a regulated industry like FSI, but it’s absolutely critical to develop a plan and start adoption to reduce the risk of being left behind.
BIZTECH: How does observability help financial institutions achieve security and compliance goals?
LEFFLER: In financial services, security and compliance need to operate in lockstep, and observability provides the visibility and guardrails to support both. It helps institutions detect risk earlier, maintain control across complex environments, and ensure consistent adherence to policies and regulations — while also reinforcing tighter collaboration between security and compliance teams. According to the State of Observability report, 64% of teams that work across both functions report fewer application and infrastructure performance issues, highlighting the value of this unified approach.
As AI becomes more embedded in financial workflows, observability also plays a critical role in ensuring use cases like fraud detection, credit scoring and customer-facing AI services remain transparent, auditable and compliant with evolving regulations.
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