FICO CEO Will Lansing discussed the record rise in consumer debt to $1.7 trillion and the company’s strong stock performance, attributing growth to increased demand for their analytics and software solutions. He emphasized the challenges of integrating AI into credit scoring due to regulatory transparency requirements, while highlighting FICO’s innovative use of technology in other areas.
In a recent interview, FICO CEO Will Lansing discussed the current state of consumer debt, which has reached a record $1.7 trillion in the third quarter, marking an 8% increase from the previous year. Despite this rise in debt, Lansing noted a slight improvement in delinquency rates. He emphasized the importance of understanding consumer health through FICO’s unique perspective in the analytics and credit scoring industry.
Lansing highlighted FICO’s strong performance in the stock market, noting that the company has been one of the best performers in the S&P 500 this year. He attributed this success to the growth in both their scores and software businesses, which are experiencing double-digit growth. The demand for analytics software has surged as businesses seek to optimize their interactions with consumers, driving FICO’s continued expansion.
Reflecting on the evolution of credit scores, Lansing pointed out that while credit scores were previously seen as a key indicator for major purchases or employment, the landscape has changed significantly over the last decade. The availability of more data has allowed FICO’s software to make more precise decisions, broadening the total addressable market for their services and increasing demand from businesses.
When discussing the role of artificial intelligence (AI) in FICO’s operations, Lansing explained that while AI and machine learning have been utilized for a long time, they do not apply these technologies in their scoring models due to regulatory concerns. Regulators require transparency in decision-making processes, and AI’s “black box” nature poses challenges in this regard. However, FICO does leverage AI for other applications, such as synthetic data generation and developing methods to audit AI decision-making.
In conclusion, Lansing’s insights reveal a complex landscape of consumer credit and the evolving role of data analytics in financial decision-making. While consumer debt is rising, FICO’s strong performance and innovative use of technology position the company well for future growth. The balance between leveraging advanced analytics and adhering to regulatory standards remains a critical focus for FICO as they navigate the changing economic environment.