Blog

How Network Observability Solves 3 Key IT Challenges in Financial Services

Man holding credit card and using smartphone at home online shopping ecommerce internet banking spend money work from home concept.

Financial services IT teams operate under intense pressure to secure sensitive data, modernize aging infrastructure, and comply with a growing list of regulations. These demands are heightened by complex hybrid environments, evolving cyber threats, and the relentless pace of digital transformation. 

Network observability has emerged as a critical capability that helps financial institutions address these challenges with greater speed, confidence, and clarity. By delivering deep, real-time visibility into network behavior and system performance, observability empowers teams to detect threats, manage legacy-to-cloud transitions, and meet regulatory obligations with less risk and fewer blind spots. 

1. Strengthening Cybersecurity in an Evolving Threat Landscape 

Why Financial Services Are High-Risk Targets 

Cybercriminals and nation-state actors increasingly target financial institutions using advanced techniques, including AI-enhanced attacks. According to IBM’s 2024 Cost of a Data Breach report, the finance and insurance sector experienced one of the highest average data breach costs at $6.08 million per incident—second only to healthcare. 

Traditional security tools like firewalls and endpoint detection systems often fall short. They focus on perimeter defense and are poorly suited to identifying threats that have already bypassed initial safeguards. Network observability closes this gap by inspecting internal traffic and user behavior in real time. 

Detection of Advanced Persistent Threats

Observability platforms excel at detecting threats that mimic legitimate activity. By inspecting traffic at multiple layers and generating rich metadata, they help analysts spot behavior that’s unusual for a given user, system, or service. This includes: 

  • Rogue administrative tools initiating transfers 
  • Unusual encrypted communications from unauthorized applications 
  • Repeated patterns tied to known command-and-control infrastructure 

In cases of suspected compromise, observability tools enable targeted packet capture, making it possible to reconstruct exactly what happened, when, and across which systems. 

Automating Detection and Response 

To prevent alert fatigue, modern observability platforms incorporate machine learning and behavioral analytics to prioritize critical threats. Automated triage helps SOC teams: 

  • Reduce false positives 
  • Identify high-risk anomalies quickly 
  • Focus on issues that truly require intervention 

This speed and clarity are especially valuable in financial environments that process millions of transactions per day. 

Insider Threats and East-West Visibility 

Not all threats come from outside. Insider activity—whether malicious or accidental—accounts for a significant share of data breaches. Network observability provides east-west traffic visibility across hybrid-cloud environments, detecting unusual access attempts, data movement, or unauthorized behavior within internal systems. 

Forensic Clarity Post-Incident 

When breaches occur, observability tools offer the packet-level detail needed to understand scope and impact. Teams can reconstruct an attack timeline, identify affected systems, and determine whether data was accessed or exfiltrated. This turns chaotic incident response into a structured, evidence-driven process. 

2. Supporting Digital Transformation While Managing Legacy Systems 

The Weight of Technical Debt 

Legacy systems are deeply embedded in many financial institutions, often supporting critical operations. However, they limit agility, introduce risk, and create significant maintenance overhead. According to Gartner, 91% of organizations cite technical debt as a barrier to transformation, while a Deloitte survey found that outdated infrastructure remains one of the top roadblocks to modernization. 

Observability as a Transformation Enabler 

As institutions migrate to cloud-native architectures, network observability plays a vital role in ensuring smooth transitions. It provides: 

  • Visibility into transaction flows during migrations 
  • Insight into interdependencies between legacy and modern systems 
  • Performance monitoring across both environments in parallel 

This real-time visibility allows teams to plan cutovers with confidence, detect performance degradation early, and keep business operations uninterrupted. 

Unified Monitoring Across Hybrid Environments 

Modern financial institutions operate across a patchwork of data centers, cloud providers, and on-prem systems.  

Network observability consolidates performance data across systems and provides IT teams with real-time insights into the behavior of the entire environment. This unified visibility makes it possible to troubleshoot issues, maintain compliance, and optimize performance without toggling between siloed dashboards. 

This centralization improves reliability and helps teams resolve issues quickly, before they impact users or SLAs. 

Performance Assurance During Migration Windows 

Maintaining performance during infrastructure shifts is non-negotiable in financial services. Observability tools help ensure that customer-facing applications, trading platforms, and backend services continue to perform under stress. They highlight: 

  • Latency spikes 
  • Application slowdowns 
  • Resource constraints or misconfigurations 

This early warning system helps IT teams make real-time adjustments before minor hiccups escalate into business disruptions. 

3. Simplifying Compliance and Strengthening Operational Resilience 

The Expanding Compliance Burden 

Financial institutions must navigate a dense regulatory landscape that includes PCI DSS, FFIEC guidelines, GDPR, and new laws like the Digital Operational Resilience Act (DORA). These frameworks demand robust monitoring, incident reporting, and detailed audit trails. 

Network observability delivers the transparency required to meet these obligations. By providing real-time tracking of network activity, user behavior, and system changes, it supports a range of compliance goals, from access control to incident reporting. 

Real-Time Monitoring and Automated Audit Trails 

One of the key advantages of observability platforms is their ability to generate comprehensive audit logs automatically. These logs capture user activity, system changes, and network transactions, enabling compliance teams to demonstrate that controls are in place and functioning as required. In the event of an audit or regulatory inquiry, these records provide immediate access to the evidence needed for verification. 

Observability also helps institutions meet incident reporting obligations by providing visibility into threats as they unfold. Rather than discovering breaches after the fact, IT teams can detect anomalies early, investigate them thoroughly, and report on them accurately. 

Managing Compliance Across Jurisdictions 

Multinational institutions face the added challenge of meeting overlapping requirements across multiple jurisdictions. Observability tools allow teams to tailor policies, monitor compliance across all regions, and generate localized reporting—without having to manage a separate monitoring stack for each country. 

This centralization not only reduces operational complexity but also ensures a more coherent, scalable approach to compliance management across the organization. 

From Reactive to Proactive Risk Management 

Perhaps most importantly, observability shifts compliance from a reactive burden to a proactive discipline. With continuous monitoring and intelligent analytics, institutions can detect compliance risks before they become violations, and course-correct with minimal disruption. 

By ensuring accurate, timely, and comprehensive visibility into system behavior, observability supports accurate reporting and stronger internal controls—all while reducing the risk of regulatory missteps. 

Concluding Thoughts 

From defending against cyberattacks to managing digital transformation and staying compliant with regulatory mandates, the demands on financial services IT teams are only growing more intense. Network observability offers a powerful, unified solution. 

It equips institutions with the tools to secure their networks, modernize infrastructure, and demonstrate compliance with confidence. More than just a monitoring tool, observability is becoming foundational to resilient, adaptive IT operations in a sector where failure is not an option. 

Want to see this in action? Book a personalized demo with one of our engineers and discover how our network observability & defense platform can help your team enhance security, streamline modernization, and stay ahead of compliance demands.