Businessmodel of FICO

Customer Segments

FICO has a niche market business model. The company provides its services to businesses seeking to increase growth rates and improve customer satisfaction. Its major customer groups are:

• Banks - Banks wish to implement user configurable, automated decision making across all lending products within Retail Credit Risk and to introduce flexibility in order to remain competitive.
• Insurance and Pension Companies – Such companies want to develop a pioneering self-service portal for citizens to manage their own pension planning and insurance programs, and to meet the government’s reforms.
• Others – Food, technology and manufacturing companies that require an unprecedented level of customization for their interactive marketing initiatives are FICO’s customers. Such companies look forward to gain better insight into onboarding decisions through real-time analytics presented within dashboards and other intuitive user interfaces. ### Value Propositions

FICO offers two primary value propositions: Reputation and accuracy.

FICO Score is easily the most widely used score by lenders. It is still considered the gold standard for evaluating creditworthiness. According to the firm’s website, 90% of the top U.S. lending institutions use its scores, and 95% of financial institutions in the U.S. are FICO clients.

Another aspect to consider is that the FICO regularly updates its software analytics and tools. And FICO Score algorithm is updated periodically to reflect more current lending trends and consumer behaviors. The most recent FICO Score that is widely used by lenders is FICO Score 8. This is the base FICO Score primarily featured in most FICO products and most widely used by lenders.

Channels

FICO’s primary channels are its sales and marketing staff, and its online marketing. The sales staff operates in FICO offices throughout the world serving all types of industries.

FICO has also a significant online presence due to its user-friendly website and considerable activity on social media which helps it reach out to customers.

Customer Relationships

FICO’s customer relationships are primarily of a personal assistance nature; although, there is a dedicated personal assistance factor too.

The company provides its customers with active personal assistance and, in some cases, a sales representative is assigned to handle all the needs and questions of a special set of clients. The reason is that its clients are different types of companies facing different challenges; so, the solution for each is different and personalized.

Key Activities

The key activities of FICO are developing and providing analytics, security, debt management and communications solutions and products to its clients to help them tackle the business challenges they face.

Key partners

FICO has formed partnerships with top tier systems integrators, technology providers, data providers, service providers and processors. The FICO partner program has four tiers – Platinum, Gold, Silver, and authorized – with benefits that increase with the tier level. Its featured partners are Tata Consultancy Services (TCS), Hewlett Packard Enterprise (HPE) and Capgemini Financial Services USA Inc.

Key Resources

FICO’s main resources are its human resources which design, develop and supply the software analytics and tools that make up the core of FICO. There are nearly over 2700 people employed at FICO’s offices spread all around the world. They also include sales and marketing staff of FICO.

In addition, FICO holds at least 170 US and foreign patents, and has 93 pending patent applications in different areas such as Network Protection, Fraud Detection, Personalized Marketing and Real-Time Analytic Discovery. Also, 100 Billion FICO Scores have been sold to date making FICO the most used credit score in the world.

Revenue Streams

FICO makes money by providing software solutions for a broad range of purposes, such as combating fraud and making operations more efficient.

Another way through which FICO makes money is by selling its scores directly to consumers as part of a credit monitoring service. The company also sells its scores to lenders, which use them as a key factor in their lending choices.