FICOFair Isaac Corporation

“Financially, a substantial majority of our Platform segment annual recurring revenue, approaching $350 million and growing rapidly is driven by the FICO Platform, reflecting years of proven commercialization.”

“with respect to AI displacing the FICO score, we have a really well-defined body of law and the fair lending laws, which are designed to protect consumers to ensure that there's not discrimination, ensure that consumers are treated fairly. And that requires compliance with all kinds of things that our scores take into account. I mean just one small example would be red lining, which is not allowed in the United States. Is it a predictive factor? Yes, it's a predictive factor, but it's not allowed. And so you can't use red lining as a factor in a credit score. Well, AI doesn't -- AI would find 100 other ways to get to the same result. And so the regulators are not going to be comfortable with AI making underwriting decisions when they're not explainable when it's a black box, when they can't demonstrate that discrimination is not occurring.”

“FICO scores carry with them 32 reason codes. So when a consumer turn down for credit, they get a letter and/or the line is not increased on a request or whatever, they get a letter, and the letter says, here's why. And that reaches into the FICO score and the reason codes and those reason codes are shared with the consumer. And so there's a level of comfort with the regulators and with the consumer that they understand what's going on. I would also point out that the experiment with AI and some of the black box underwriting that was undertaken several years ago by Upstart ended with the CFPB shutting it down.”

“In our software business, as shown on Page 13, FICO Platform is architected from the ground up to be agentic-by-design. That foundation delivers decision grade analytics, deep domain expertise, and an enterprise platform that clients depend on for precision, consistency, explainability and trust. These principles are nonnegotiable for our primary target market, the highly regulated financial services industry. FICO Platform is the world's leading AI decisioning platform for financial services recognized as such as a leader by Gartner, Forrester and IDC.”

“In addition, our scoring models are supported by proprietary data access, mainly with the credit bureaus and deep ecosystem integration. Across both businesses, FICO has been issued 137 AI-based patents, which include patents and blockchain technology that are helpful for traceable and explainable decision-making, the type of market-leading innovation that will be in high demand as businesses seek ways to safely deploy AI analytics in highly regulated industries.”

“Its agentic architecture power is a real-time, always-on customer profile engine that delivers hyperpersonalized consumer experiences where every interaction can inform and improve the next. There are over 150 clients globally using the FICO Platform across multiple connected use cases to power their customer experience, business critical operations, risk management and fraud monitoring and prevention.”

“FICO Platform's marketplace and FICO Assistant unlock broader capabilities that compound with scale. Every new model, agent and integration from the ecosystem strengthens the customer profile engine and accelerate consumption of proprietary capabilities across the platform. At FICO, AI is already driving meaningful results today while creating significant opportunities that we are well positioned to capture.”

“FICO Platform accelerates client innovation by providing clients with the ability to build, test, optimize and monitor decisioning across the enterprise. With FICO AI-guided operations, clients create a self-reinforcing cycle of value generation, reinvesting outcomes back into the platform by enabling additional use cases, driving further value for their businesses.”

“As AI adoption accelerates, we recognize the need of stakeholders to weigh the associated opportunities and risks. At FICO, we view AI as a tremendous opportunity that we've committed significant resources to for several years. In the Scores business, AI is limited by strict regulatory requirements on credit underwriting outcome explainability and model governance.”

“we are prepared for the day when AI is appropriate in underwriting. We have patents in the area of explainability and ethical AI. And so I think we're in an advantaged position, but I would not hold my breath. I think that's going to take a long time.”

“FICO transformed 70 years of proven deep domain knowledge into validated expandable AI that powers the most consequential business decisions with that expertise embedded directly into the agents, models and guardrails that operate on the platform.”