How Observability Technology Can Help Banks Create a Seamless Customer Experience

For years, banking has lagged behind other industries in digital innovation. As a result, financial institutions have struggled to satisfy customer expectations and create seamless experiences for users. However, thanks to the introduction of new technologies, this gap is finally closing. With the understanding that consumers can—and do—choose where to bank based on the quality of the digital experience, even traditional banks have prioritized introducing new digital services and products (partially enabled by open banking APIs) amid the popularity of a crop of upstart neobanks and fintechs, which are competing primarily through digital channels.

This trend is only likely to continue in the years to come, and in this new world of financial services, it’s easier than ever for consumers to switch from one institution to another. And service disruptions like downtime, latency, or feature unavailability aren’t just an annoyance; they're an existential threat to institutions that increasingly compete on the quality and reliability of the digital experience. Moving forward, banks must invest in observability tech that keeps up with their distributed environments in order to enhance their customer experience.

Why Is It Important to Digitally Transform?

Today’s customers expect quick, seamless, and personalized experiences. In a service-focused industry like banking, the No. 1 priority is always to optimize that experience. It also behooves banks to remain competitive in the growing market of fintech companies and digital-first banks, which are disrupting the traditional banking model. As time goes on, financial institutions that are resistant to implementing advanced technologies to automate and streamline processes will run the risk of becoming obsolete.

Barriers for Banks

Many obstacles stand in the way of technological innovation in the banking and finance sector, causing organizations in this industry to fall flat in the opportunity to create a seamless customer experience for their users. Legacy systems hold back innovation, and banks face an uphill battle against their heavy regulatory compliance. They must ensure that any new technology complies with existing and evolving regulatory requirements, which can slow down the process of digital transformation. Further impeded by the rise in cyberthreats, banks are cautious in adopting new technologies that could potentially introduce vulnerabilities into their systems. Data security is of paramount concern here as well; digital transformation initiatives must prioritize data privacy.

Importance of Observability

Today, banks are faced with rapid digital transformation in tandem with their reliance on legacy systems, making adoption of new systems challenging and resource-intensive. This can lead to issues such as outdated interfaces, cumbersome online banking processes, and a lack of seamless integration across different banking channels. Moreover, legacy tools often neglect or eschew data analytics for effective analysis of customer needs, leading to a lack of predictive and/or personal service offerings.

At this point, almost all legacy banks are in some stage of digital transformation, straddling on-premises and cloud support. Integrating these systems while ensuring seamless operation can be challenging; in a distributed environment, data is often spread across multiple locations, making management and protection of data more complex, especially considering privacy laws and regulations. Service disruptions, such as downtime or latency, can severely impact customer experience. Any delay or unavailability of features can lead to customer dissatisfaction and loss of trust. However, by implementing technology that promotes observability, they can avoid outages and frustrated customers.

Continuous observability provides banks with comprehensive visibility into their IT infrastructure, both on-premises and in the cloud. This allows for real-time monitoring of systems and applications, helping to identify and address potential issues before they impact customers. As a latent benefit, observability tools can gather vast amounts of data from various sources. Analyzing this data can provide insights for improving services, enhancing customer experience, and making informed business decisions.

To facilitate this transition, banks can initiate a phased adoption of IT observability by selecting tools that offer comprehensive monitoring capabilities and are compatible with both cloud and on-premises environments. It’s also essential to create a centralized dashboard that provides an overview of the entire IT infrastructure, making it easier to monitor and manage.

Who’s Doing It Right?

There are many reasons why financial institutions have been slower to digitally innovate compared to other industries. In addition to the obstacles and risks outlined above—legacy infrastructure, heavy regulation, cybersecurity risk and data security—banks often have a risk-averse culture, which can hinder the adoption of innovative, technology-driven solutions. As a result, there is a tendency to stick to tried-and-tested methods rather than experimenting with new digital approaches.

However, as demonstrated by DBS Bank, embracing digital transformation can be extremely beneficial. DBS Bank—which has been hailed as an industry leader in digital innovation—has integrated digital technology as a part of its core strategy, with key initiatives including “intelligent banking,” which combines predictive analytics, artificial intelligence (AI) and machine learning (ML), and a customer-centric design to convert data into hyperpersonalized “nudges” that help customers make more informed banking and investment decisions. DBS Bank also leverages an AI-powered engine that provides self-service digital options for customers, and as of January 2023, 99 percent of its applications are cloud-native or cloud-enabled. This has proven to be great for profits too; DBS Bank’s Q3 net profit for 2023 saw a 23 percent increase, which was a record high.

Looking Ahead

To move beyond general monitoring and keep pace with the times, financial institutions must invest in technology that answers the “what” and the “where” of incident response, providing DevOps teams with the ability to validate the “why” and focus on the mitigation and restoration as quickly as possible. This largely includes tools that excel at using AI to determine causality and correlate service issues with elements in the production environment(s), whether on-prem or cloud-native. Also on the AI front, LLMs will excel at tasks like scrubbing through logs and data sources to correlate phenomena with known knowledge bases.

Tools with zero-instrumentation or low-cost configuration can cut down on adoption time, and leveraging AI and ML algorithms for predictive analytics can help anticipate issues before they occur, which all contribute to a seamless customer experience.

Amir Krayden is the cofounder and CEO of AIOps platform Senser. A veteran of observability and analytics for complex distributed environments, Krayden was an early employee of DriveNets, where he oversaw network infrastructure for the largest global telecommunications companies as VP of research and architecture. He previously led R&D for an elite group of the Israeli Defense Forces (IDF) developing hardware, firmware, and software for embedded devices.