In an interview, FICO CEO William Lansing discussed the company’s financial performance and emphasized that while FICO has been involved in AI for over 20 years, it does not use AI in its credit scoring processes due to regulatory requirements for transparency. He highlighted FICO’s commitment to innovation and adapting to emerging financial trends while maintaining compliance and transparency in their scoring methods.
In a recent interview, FICO CEO William Lansing discussed the company’s financial performance, which included a revenue of $447.8 million and plans to acquire up to $1 billion worth of shares. Lansing elaborated on FICO’s business model, which consists of two main segments: the software business and the credit scoring business. The scores are sold to lenders through partnerships with credit bureaus, while the software segment focuses on applying analytics to consumer-facing data, although it is not as profitable as the scoring segment.
Lansing emphasized that while FICO has been involved in AI for over 20 years, particularly in credit card fraud detection, the company does not use AI in its credit scoring processes. This decision is primarily due to legal regulations that require transparency in credit scoring. The use of AI is often viewed as a “black box,” which presents challenges in complying with credit laws and explaining scoring decisions to consumers. Instead, FICO employs AI in areas such as synthetic data and has developed patents related to blockchain technology to enhance decision-making transparency.
When questioned about the company’s stock performance, Lansing acknowledged the significant increase in FICO’s market capitalization, which stands at $38 billion. He attributed the stock’s growth over the last decade to the company’s strong prospects and its vital role in the credit system. Lansing believes that FICO’s ability to evaluate creditworthiness efficiently will continue to be a crucial tool for lenders, underpinning the company’s sustained value and innovation initiatives.
The conversation also touched on emerging financial trends, such as the “buy now/pay later” model, which Lansing indicates FICO is actively engaged with. He clarified that while FICO is not primarily a data company, they analyze various consumer behaviors reported by creditors, including those involved in buy now/pay later schemes. This collaboration allows FICO to utilize additional data sources to enhance their analytics capabilities.
In conclusion, Lansing highlighted FICO’s commitment to innovation within the credit evaluation landscape, expressing confidence in the ongoing relevance of their scoring system. As the financial ecosystem evolves, FICO aims to adapt by integrating new data sources and technologies while maintaining compliance and transparency in their scoring methods.