What changed in this filing

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Item 1. Business

2020-11-12 compared with 2019-11-08 · 125 added, 125 removed, 256 unchanged (49% of the section changed)

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Most leading banks and credit card issuers rely on our solutions, as do insurers, retailers, telecommunications providers, automotive companies, pharmaceutical companies, healthcare organizations, public agencies and organizations in other industries.

We also serve consumers through online services that enable people to purchase and understand their FICO ® Scores, the standard measure in the U.S.

We also serve consumers through online services that enable people to access and understand their FICO ® Scores, the standard measure in the U.S.

of consumer credit risk, empowering them to manage their financial health.

More information about us can be found on our website, www.fico.com.

We make our Annual Report on Form 10-K, our Quarterly Reports on Form 10-Q and our Current Reports on Form 8-K, as well as amendments to those reports, available free of charge through our website as soon as reasonably practicable after we electronically file them with the SEC.

We make our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, as well as amendments to those reports, available free of charge through our website as soon as reasonably practicable after we electronically file them with the SEC.

References to our website address in this report do not constitute an incorporation by reference.

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Our solutions enable users to make decisions that are more precise, consistent and agile, and that systematically advance business goals.

This helps our clients to reduce the cost of doing business, increase revenues and profitability, reduce losses from risks and fraud, and increase customer loyalty.

This helps our clients reduce the cost of doing business and losses from risks and fraud, while helping increase revenues, profitability, and customer loyalty.

We categorize our products and services into the following three operating segments:

Applications.

This segment includes pre-configured decision management applications designed for a specific type of business problem or process — such as marketing, account origination, customer management, fraud, collections and insurance claims management — as well as associated professional services.

These applications are available to our customers as on-premises software, and many are available as hosted, software-as-a-service (“SaaS”) applications through the FICO ® Analytic Cloud or third-party public clouds, such as those provided by Amazon Web Services (“AWS”).

This segment includes pre-configured decision management applications designed for a specific type of business problem or process — such as marketing, account origination, customer management, fraud, financial crimes compliance, collections and insurance claims management — as well as associated professional services.

This segment includes our business-to-business scoring solutions and services, our business-to-consumer scoring solutions and services including myFICO ® solutions for consumers, and associated professional services.

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This segment is composed of analytic and decision management software tools that clients can use to create their own custom decision management applications, our FICO ® Decision Management Suite, as well as associated professional services.

These tools are available to our customers as on-premises software, through the FICO ® Analytic Cloud or third-party public clouds, such as those provided by AWS.

Decision management software is currently delivered as part of the FICO ® Platform and is increasingly being adopted to connect decisioning solutions or previously disconnected use cases.

These tools are available to our customers as on-premises software, through the FICO ® Analytic Cloud or AWS.

Our Solutions

Our solutions involve four fundamental disciplines:

Analytics, which include predictive analytics that identify risks and opportunities associated with individual customers, prospects and transactions, in order to detect patterns such as risk and fraud, as well as optimization analytics that are used to improve the design of decision logic or “strategies.”

Analytics, which include predictive analytics that identify risks and opportunities associated with individual customers, prospects and transactions, in order to detect patterns such as risk, fraud or profitability, as well as optimization analytics that are used to mathematically improve the design of decision logic or “strategies.”

Data management and transaction profiling that bring extensive consumer information to every decision.

Software such as decision management systems that author and implement business rules, models and decision strategies, often in a real-time environment, as well as software for managing customer engagement.

This software is increasingly deployed as a platform solution that enables previously disparate use cases to be connected in a manner that provides a centralized or 360-degree view of a customer’s journey through traditionally siloed client offerings.

Consulting services that help clients make the most of investments in FICO applications, tools and scores in the shortest possible time.

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Our applications primarily serve clients in the banking, insurance, telecommunications, healthcare, retail and public sectors.

During fiscal 2019, we continued to expand our product offerings for the FICO ® Analytic Cloud and AWS, resulting in increased sales opportunities by accommodating small to mid-size businesses that benefit from the affordability and simplicity of cloud-based solutions.

Within our Applications segment, our fraud solutions accounted for 18%, 17%, and 19% of total revenues in each of fiscal 2019, 2018 and 2017, respectively;

our customer communication services accounted for 9%, 10%, and 10% of total revenues for each of these periods, respectively;

and our customer management solutions accounted for 6%, 8%, and 8% of total revenues in each of these periods, respectively.

Marketing Applications

FICO ® Marketing Solutions Suite is made up of products, capabilities and services designed to integrate the technology and analytic services needed to perform context-sensitive customer acquisition, cross-selling and retention programs and deliver mathematically optimized offers.

The Marketing Solutions Suite enables companies that offer multiple products and use multiple channels (companies such as large financial institutions, consumer branded goods companies, pharmaceutical companies, retail merchants and hospitality companies) to execute more efficient and profitable customer interactions.

Services offered in our marketing solutions include customer data integration services;

services that enable real-time marketing through direct consumer interaction channels;

campaign management, messaging and optimization services;

interactive tools that automate the design, execution and collection of customer response data across multiple channels;

and customer data collection, management and profiling services.

Originations Applications

During fiscal 2020, we continued to expand our product offerings for the FICO ® Analytic Cloud and AWS, resulting in increased sales opportunities by accommodating customers that can benefit from the power, flexibility and modularity of these solutions.

Within our Applications segment our fraud solutions accounted for 15% , 18% and 17% of total revenues in each of fiscal 2020, 2019 and 2018 , respectively, and our customer communication services accounted for 8% , 9% and 10% of total revenues in each of these periods, respectively.

Origination Applications

We provide solutions that enable banks, credit unions, finance companies, alternative peer-to-peer and online lenders, auto lenders, and other companies to automate and improve the processing of requests for credit or service.

These solutions increase the speed and efficiency with which requests are handled, reduce losses, and increase approval rates through analytics that assess applicant risk and reduce the need for manual review by loan officers.

FICO ® Origination Manager, an application-to-decision processing solution, is available both on premises and in the FICO ® Analytic Cloud.

FICO ® Origination Manager, an application-to-decision processing solution, is available both on-premises and in the FICO ® Analytic Cloud, and we plan to make it available in the AWS cloud in fiscal 2021 with the launch of FICO ® Origination Manager 5.0.

Other solutions include the web-based FICO ® LiquidCredit ® service, which is primarily focused on credit decisions and offered largely to mid-tier banking institutions.

FICO ® Small Business Scoring Service℠ (SBSS) is recognized as the industry leader in assessing the risk of U.S.

small business credit applicants.

SBSS is delivered via our LiquidCredit service infrastructure and it brings the speed of consumer lending to small business lending decisions.

With SBSS, clients can typically make decisions in hours rather than days to improve customer satisfaction and help attract more small businesses.

Delivered as a cloud service, FICO ® Origination Manager Essentials offers mid-market organizations the ability to inexpensively set up and process small business applications quickly, without a long or difficult implementation process.

We also offer custom and consortium-based credit risk and application fraud models.

Origination Manager Essentials will be phased out in August 2021.

To support origination, we also offer custom and consortium-based credit risk and application fraud models.

Customer Management Applications

Our customer strategy management products and services enable businesses to automate and improve risk-based decisions for their existing customers.

Our customer portfolio management products and services enable businesses to automate and improve risk-based decisions for their existing customers.

These solutions help businesses apply advanced analytics in account and customer decisions to increase portfolio revenue, decrease risk exposure and losses, and reduce customer attrition, while improving operational efficiencies.

We provide customer strategy management solutions for banking, telecommunications and retail.

We provide customer portfolio management solutions for banking, telecommunications and retail.

FICO ® TRIAD ® Customer Manager, a leading credit management system, is available both on-premises and in the FICO ® Analytic Cloud.

The solution is an adaptive control system, which enables businesses to rapidly adapt to changing business and internal conditions by designing and testing new strategies in a “champion/challenger” environment.

The current version enables users to manage risk and communications at both the account and customer level from a single platform.

We market and sell FICO ® TRIAD ® Customer Manager software licenses, maintenance, consulting services, and strategy design and evaluation.

Additionally, we provide TRIAD services and similar credit account management services through third-party credit card processors worldwide, including two of the largest processors in the U.S.

Fraud and Security Management Applications

Our fraud management products improve our clients’ profitability by predicting the likelihood a given transaction or customer account is experiencing fraud.

Our fraud products analyze transactions in real time and generate recommendations for immediate action, which is critical to stopping third-party fraud, as well as first-party fraud and deliberate misuse of account privileges.

Our solutions are designed to detect and prevent a wide variety of fraud and risk types across multiple industries, including credit and debit payment card fraud;

e-payment fraud;

deposit account fraud;

identity theft;

healthcare fraud;

Medicaid and Medicare fraud;

and property and casualty insurance claims fraud, including workers’ compensation fraud.

FICO fraud solutions protect financial institutions, insurance companies and government agencies from losses and damaged customer relationships caused by fraud and related criminal behavior.

Our leading fraud detection solution is the FICO ® Falcon ® Platform, recognized as a leader in global payment card fraud detection.

The Falcon ® Platform examines transaction, cardholder, account, customer, device and merchant data to detect a wide range of payment card fraud quickly and accurately utilizing artificial intelligence technology.

It analyzes payment transactions in real time, assesses the risk of fraud in a fraud score, and provides the ability for user-defined variables and rules strategies to be used in conjunction with the fraud score to prevent fraud while expediting legitimate transactions.

FICO ® Strategy Director is the newest, more flexible customer management application available on the FICO Analytic Cloud and AWS.

These solutions enable businesses to rapidly adapt to changing business and internal conditions by designing and testing new strategies in a “champion/challenger” environment.

The current versions enable users to manage risk and communications at both the account and customer level from a single platform.

We market and sell FICO ® TRIAD ® Customer Manager and FICO ® Strategy Director software licenses, maintenance, consulting services, and strategy design and evaluation.

Additionally, we provide TRIAD and Strategy Director services and similar credit account management services through third-party credit card processors worldwide, including two of the largest processors in the U.S.

Fraud Protection and Compliance Applications

Our fraud protection and compliance products improve our clients’ profitability by providing protections across the customer lifecycle from account origination to digital customer interactions—such as online or mobile logins—to non-monetary transactions—such as address changes or pin changes—to payment transactions.

Our fraud and financial crimes solutions analyze activity in real time and generate recommendations for immediate action.

These defenses are critical to stopping synthetic identity fraud, first-party fraud, and third-party fraud, as well as identifying money laundering activity to help our clients stay compliant and secure while safeguarding the customer experience.

Our fraud solutions are designed to detect and prevent a wide variety of risk types.

By looking across products and channels—including real-time payments, peer-to-peer transactions, digital payments, card payments (credit, debit, prepaid), and deposits—FICO helps financial institutions reduce losses and damaged customer relationships caused by fraud and related criminal behavior.

FICO fraud solutions also help protect retailers, insurance companies and government agencies.

Our leading fraud detection solution is the FICO ® Falcon ® Platform, which is recognized as a global leader in fraud detection.

The Falcon Platform examines transactional, account, customer, device and merchant data to detect a wide range of fraud indicators quickly and accurately by utilizing artificial intelligence technology.

It analyzes transactions in real time, assesses the risk of fraud in a fraud score, and provides the ability for user-defined variables and rules strategies to be used in conjunction with the fraud score to prevent fraud while expediting legitimate transactions.

Adaptive analytics, a form of self-learning models, can also be employed to accelerate our customers’ response to evolving fraud tactics.

In September 2019, FICO introduced FICO ® Falcon ® X, a unified platform for the detection and investigation of both fraud and financial crimes.

We also announced the FICO ® Financial Crimes Studio, which allows banks’ data science teams to develop machine learning models using open source libraries, as well as FICO machine learning libraries, and then deploy the models on FICO ® Falcon ® X for operational use.

FICO ® Fraud Predictor with Merchant Profiles is used in conjunction with the Falcon ® Platform to improve fraud detection rates through the inclusion of merchant profiles, which is especially important for online transactions.

FICO ® Fraud Predictor with Merchant Profiles is used in conjunction with the FICO ® Falcon ® Platform to improve fraud detection rates through the inclusion of merchant profiles, which is especially important for online transactions.

Merchant profiles are built using fraud and transactional data that include characteristics revealing which merchants have a history of higher fraud volumes, and which purchase types and ticket sizes have most often been fraudulent at a particular merchant, among others.

FICO ® Card Compromise Manager is used in conjunction with the FICO ® Falcon ® Platform to identify point-of-sale and e-commerce card compromises with analytically derived recommenced actions—such as card block and reissue, or watch-listing—to optimize loss prevention.

Separately, the FICO ® Card Alert Service prevents ATM debit fraud by identifying counterfeit payment cards and reporting them to issuers.

FICO ® Falcon ® Compromise Manager is used in conjunction with the FICO ® Falcon ® Platform to identify point-of-sale and e-commerce card compromises with analytically derived recommended actions—such as card block and reissue, or watch-listing—to optimize loss prevention.

Separately, the FICO ® Card Alert Service prevents ATM debit fraud by identifying counterfeit or compromised payment cards and reporting them to issuers.

The service analyzes daily transactions from participating networks and uses this data to identify common points of compromise and suspect cards most likely to incur fraud.

In addition to our Falcon ® products, we offer a wide range of solutions focused on preventing and detecting a variety of financial crimes.

We offer a wide range of solutions focused on preventing and detecting identity fraud.

In August 2019, we introduced our identity proofing and user authentication solutions, FICO ® Falcon ® Identity Proofing and FICO ® Falcon ® Authentication Suite.

Identity proofing is the digital process of onboarding new customers without requiring face-to-face verification.

The technology provides an extra layer of security that is easy to use with minimal customer inconvenience, thereby preventing fraud as well as ensuring regulatory compliance standards such as e-KYC are met.

User authentication is the real-time corroboration of an identity previously established to enable access to an electronic or digital asset.

As an authentication hub, our technology includes multifactor, biometric, and behavioral (user and device-based) capabilities.

By bringing digital identity verification into our broader portfolio, we give our clients the ability to strengthen fraud and financial crimes defenses with more contextual data and decisioning.

FICO ® Application Fraud Manager helps businesses prevent both first- and third-party fraud during the application process.

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FICO ® Identity Resolution Engine helps organizations detect and investigate organized criminal behavior using graph analytics to identify entities and their connections across federated data sources.

FICO ® Insurance Fraud Manager uses advanced unsupervised modeling techniques to detect health care claims fraud, abuse and errors as soon as unusual behavior patterns emerge.

Insurance Fraud Manager is used by both public and private health care payers to detect and prevent fraud in both pre- and post-pay fraud investigation environments.

FICO offers a comprehensive modular set of compliance solutions to fight money-laundering, terrorist financing, and to fulfill custom requirements for governance, risk and compliance.

In August 2019, FICO acquired EZMCOM, Inc.

(“EZMCOM”) to provide both identity proofing (“ID proofing”) and user authentication solutions.

ID proofing is the digital process of on-boarding new customers without requiring face-to-face verification.

The technology provides an extra layer of security that is easy to use, with minimal customer inconvenience, thereby preventing fraud as well as ensuring regulatory compliance standards such as e-KYC are met.

User authentication is the real-time corroboration of an identity previously established to enable his or her access to an electronic or digital asset.

As an authentication hub, FICO’s technology includes multifactor, biometric, and behavioral (user and device-based) capabilities.

FICO’s cybersecurity products utilize predictive analytics to deliver enterprise-level risk assessments.

The FICO ® Cyber Risk Score provides an empirically derived score that conveys the security posture of an organization and the likelihood of a material data breach in the next twelve months.

The score is used to manage the cyber risk of an enterprise as well as to assess third-party risk that may be introduced by third-party partners and suppliers.

We also offer a comprehensive modular set of compliance solutions to fight money-laundering, terrorist financing, and to fulfill custom requirements for governance, risk and compliance.

Solutions include, but are not limited to, Know Your Customer (“KYC”), Anti-Money Laundering (“AML”), and Sanctions Screening.

In September 2019, FICO introduced FICO ® Falcon ® X, a unified platform for the detection and investigation of both fraud and financial crimes.

We also announced FICO ® Analytics Workbench™—Falcon Edition, which allows banks’ data science teams to develop machine learning models using open source libraries, as well as FICO machine learning libraries, and then deploy the models on Falcon X for operational use.

Prior to October 2020, when we divested this business, the FICO ® Cyber Risk Score was part of the FICO ® Enterprise Security Suite and it provided an empirically derived score that conveyed the security posture of an organization and the likelihood of a material data breach in the following twelve months.

The score was used by customers to manage the cyber risk of an enterprise, assess third-party risk that may be introduced by third- and fourth-party partners and suppliers, and provide an effective tool for cyber insurance underwriting.

Collections & Recovery Applications

FICO ® Debt Manager ™ , FICO ® Debt Manager ™ Pro, FICO ® Debt Manager ™ Pro Plus, FICO ® PlacementsPlus ® service and Placement Optimizer SM solution (collectively, the “FICO Debt Management Solutions”) automate the full cycle of collections and recovery, including early collections, late collections, asset disposal, agency placement and optimization, recovery, litigation, bankruptcy, asset management and residual balance recovery.

FICO ® Debt Manager ™ , FICO ® Debt Manager ™ Pro, FICO ® Debt Manager ™ Pro Plus, FICO ® PlacementsPlus ® service, FICO ® Network and FICO ® Placement Optimizer SM solution (collectively, the “FICO Debt Management Solutions”) automate the full cycle of collections and recovery, including early collections, late collections, asset disposal, agency placement and optimization, recovery, litigation, bankruptcy, asset management and residual balance recovery.

PlacementsPlus service facilitates control over the distribution and management of accounts to agencies, attorneys, debt buyers and internal recovery departments.

FICO Network provides creditors with a single, secure and compliant channel to exchange data with collection agencies, credit bureaus, debt buyers, attorneys, and other vendors.

Placement Optimizer maximizes the effectiveness of the placement strategy once accounts are outsourced.

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Customer Communication Services

FICO ® Customer Communication Services provide customer engagement, fraud resolution, and collection solutions in the cloud.

It enables financial services institutions, utilities, telecommunications firms, insurers, and other businesses to engage in automated two-way communications.

It allows businesses to reach customers in real time using short message service (“SMS”), mobile applications, automated voice, email and other channels;

resolve matters such as verification of suspicious credit or debit card transactions;

request missed payments;

and resolve customer service issues.

FICO ® Customer Communication Services, combined with FICO’s decision management applications, allow businesses to execute and resolve customer interactions while improving customer outcomes.

FICO ® Customer Communication Services is an intelligent omnichannel digital communication manager for executing customer lifecycle decisions.

It enables businesses to automate individualized dialogues with the consistency and regulatory compliance of their human agents.

With Customer Communication Services, businesses can be available 24/7 for one-way or two-way communication through any channel consumers choose.

Customers can rapidly launch mobile alerts, messaging, virtual agents, self-service options and other auto-resolution capabilities.

It helps make the full customer journey—account origination and onboarding, customer management account notifications and engagement campaigns, fraud management and debt collection—more digital and raises the level of data-driven intelligence behind lifecycle communications.

In addition to its own rules-based communication logic and embedded rules engine, Customer Communication Services can execute complex multi-step strategies shaped by risk-based segmentation, predictive scores, machine learning insights and mathematical optimization.

Marketing Applications

Services offered in our marketing solutions include customer data integration services;

services that enable real-time marketing through direct consumer interaction channels;

campaign management, messaging and optimization services;

interactive tools that automate the design, execution and collection of customer response data across multiple channels;

and customer data collection, management and profiling services.

Analytic Services

We perform custom predictive, descriptive and decision modeling and related analytic projects for clients in multiple industries to address business processes across the customer life cycle.

This work leverages our analytic methodologies and expertise to solve risk management and marketing challenges for a single business, using that business’s data and industry best practices to develop a highly customized solution.

Most of this work falls under predictive analytics, decision analysis and optimization, which provide greater insight into customer preferences and future customer behavior.

Within decision analysis and optimization, we apply data and proprietary algorithms to the design of customer treatment strategies.

We perform custom analytics (descriptive, predictive and prescriptive) as well as decision modeling and related analytic and machine learning projects for clients in multiple industries.

This enables them to improve critical business processes and operationalize analytics across the customer lifecycle.

We do so with our advanced analytic methodologies and domain expertise to solve risk management, fraud, marketing and other challenges for a single business, using that business’s unique data and industry position to develop a highly customized solution.

Most of this work falls under predictive analytics, decision modeling and optimization, which provide greater insight into customer preferences, predict future customer behavior and operationalize these analytics.

Within decision analysis and optimization, we apply data and proprietary algorithms to design customer treatment strategies and improve business outcomes.

Our FICO ® Scores are used in the majority of U.S.

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Lenders generally pay the credit reporting agencies scoring fees based on usage, and the credit reporting agencies pay an associated fee to us.

FICO ® Score 9, the most recent version of the FICO ® Score, was released in early fiscal 2015.

FICO ® Score 10 and FICO ® Score 10 T, the most recent versions of the FICO ® Score, are anticipated to be released at the three U.S.

national credit reporting agencies by the end of calendar year 2020.

While the core FICO ® Score is the foundation of our scoring portfolio, we offer a number of other broad-based scores, including several specific FICO ® Industry Scores.

We also develop various custom scores for our financial services clients.

The FICO ® Score XD expands the scorable population using alternative credit data.

Additionally, we continue to innovate by investing in the development of scores that can help expand the scorable population using alternative credit data.

FICO ® Score XD looks at public records and property data, and a consumer’s history with mobile, landline phone and cable payments, to generate scores on the same 300-850 scale as standard FICO ® Scores.

FICO ® Score XD is available to lenders from LexisNexis Risk Solutions and Equifax.

We also continue to innovate with respect to scores that consider consumer permissioned data from accounts such as checking, savings, or money market accounts.

The UltraFICO ™ Score considers consumer permissioned data from accounts such as checking, savings, or money market accounts.

Incorporating consumer contributed data is a unique approach to helping empower consumers to establish or improve their creditworthiness by using data that reflects sound financial activity but that is not part of a traditional credit report.

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Outside the U.S., we offer FICO ® Scores, including scores using alternative data, for consumers, and in some cases for small and medium enterprises, through credit reporting agencies.

We also have installed client-specific versions of the FICO ® Score in over 10 countries.

We also have installed client-specific versions of the FICO ® Score in over ten countries.

Like FICO ® Scores in the U.S., these scores help lenders in multiple countries leverage the FICO ® Score’s predictive analysis to assess the risk of marketing prospects and credit applicants.

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We also have scoring systems for insurance underwriters and marketers.

They use the same underlying statistical technology as our FICO ® Scores, but are designed to predict applicant or policyholder insurance loss ratio for automobile or homeowners ’ coverage.

Our insurance scores are available in the U.S.

We license credit bureau scoring services and related consulting directly to users in banking through the FICO ® PreScore ® service for prescreening solicitation candidates.

Our FICO ® Insurance Scores use the same underlying statistical technology as our FICO ® Scores, but are designed to predict future personal auto and homeowner insurance losses for new applicants and existing policyholders.

Our insurance scores are available to the insurance industry throughout the U.S.

During fiscal 2020, we announced the launch of the FICO ® Resilience Index, a new analytic tool designed to complement FICO ® Score models by identifying those consumers who are most resilient to economic stress relative to other consumers within the same FICO ® Score bands.

FICO ® Resilience Index would enable industry participants to more precisely assess credit risk and extend credit to more consumers throughout the economic cycle by managing the risk that emerges during periods of economic stress.

We also provide FICO ® Score based products, education and information on FICO ® Scores to consumers.

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Decision Management Software

We provide analytic and decision management platforms and tools that businesses use to build their own tailored, analytically powered decision management applications on-premises, within the FICO ® Analytic Cloud or via third-party cloud environments such as AWS.

In contrast to our packaged applications developed for specific industry solutions, our tools platform adds scalable and flexible decision management capabilities to virtually any application or operational system .

These tools are sold as licensed software or as a platform-as-a-service (“PaaS”) offering in the cloud, and can be used standalone, or in conjunction with third-party solutions to advance a client’s decision management initiatives.

We use these tools as common software components for our own decision management solutions, described above in the Applications section.

They are also key components of our decision management architecture.

We also partner with third-party providers within given industry markets and with major software companies to embed our tools within existing applications.

During fiscal 2019, FICO continued to enhance the FICO ® Decision Management Suite, a collection of tools for building, extending, deploying and scaling applications and solutions.

The Decision Management Suite includes the FICO ® Decision Management Platform, along with capabilities for authoring, customizing, executing, and managing predictive analytic, decisioning, and optimization components and services;

We provide an analytics and decision management platform that businesses use to build their own tailored, analytically-powered decision management applications.

The FICO ® Decision Management Platform adds scalable and flexible decision management capabilities to virtually any application or operational system .

Together, these tools are sold as licensed software or as a SaaS offering in the cloud, and can be used standalone, or in conjunction with third-party solutions, to advance a client’s decision management initiatives.

We use these tools as foundational components for our own decision management solutions, described above in the “Applications” section, enhancing the cross-compatibility and extensibility of all of the software solutions we build and deliver.

We also partner with third-party providers within given industry markets and with major software companies to embed our tools and other FICO Decision Management Platform components within their existing applications.

During fiscal 2020, FICO continued to enhance the FICO ® Decision Management Platform and related services for building, extending, deploying and scaling decision management applications and solutions.

These services are collectively referred to as the FICO ® Decision Management Suite, and include capabilities for authoring, customizing, executing, and managing predictive analytic, decisioning, and optimization components and services;

developing, orchestrating and publishing analytics-powered applications;

and visualizing, analyzing and reporting data trends.

The FICO ® Decision Management Suite is available on-premises, in the FICO ® Analytic Cloud, or in third-party public cloud solutions such as AWS;

businesses can choose any of these three deployments depending on their specific needs, IT environments and other factors.

Recent upgrades and enhancements to the functionality in the suite include:

FICO ® Decision Management Platform, the fundamental backbone of the Suite, which dramatically improves performance, data interchange, model tracking and user collaboration;

FICO ® Decision Modeler, the core decision rules modeling tool, which improves scale, performance, and versatility;

FICO ® Analytics Workbench, the consolidated predictive analytics modeling tool, which improves overall capabilities, explainable AI functionality, and data wrangling;

Component capabilities include:

FICO ® Decision Management Platform, which connects, executes and powers proprietary platform services that dramatically improve performance, data interchange, model tracking and user collaboration;

FICO ® Decision Modeler, the core decision rules modeling tool, which enables users to flexibly author and manage decision rules and strategies;

FICO ® Analytics Workbench™, the consolidated predictive analytics modeling authoring tool, with data wrangling, machine learning and explainable AI;

FICO ® Applications Workbench, an agile application UI builder, which leverages platform services to speed time to application deployment;

FICO ® Strategy Director, which helps organizations proactively manage consumer accounts to increase revenue, decrease risk and improve customer retention;

FICO ® Decision Central™ (formerly known as Model Central), an analytic and decision model management tool, which expands its versatility and usability across a much broader range of implementations and use cases and makes it fully cloud-capable;

FICO ® Decision Central™ (formerly known as Model Central), a solution which enables users to monitor, manage, measure and control the deployment and performance of all decision assets including analytic models and rules-based decision strategies;

FICO ® Xpress Optimization, an optimization modeling suite which includes both the solver technology, Mosel, as well as a general-purpose optimization solver, Xpress Insight;

The FICO ® Decision Management Suite combines big data, predictive analytics and decision execution together in an easy-to-use development environment.

FICO ® Decision Management Platform Streaming, a real-time and batch data ingestion solution that uniquely delivers in-stream analytics for real-time data insights and complex event processing.

The FICO ® Decision Management Suite enables FICO’s clients to combine big data, predictive analytics and decision execution together in an easy-to-use, integrated development and deployment environment.

It enables organizations to rapidly create innovative analytic applications;

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and execute decisions in real time.

It also empowers business analysts and other domain experts to modify systems in real time without IT involvement, providing organizations with the agility they need to rapidly respond to customer, regulatory and business changes.

The principal products offered are software tools for:

It also empowers business analysts and other domain experts to modify systems without IT involvement, providing organizations with the agility they need to rapidly respond to customer, regulatory and business changes.

In addition, FICO offers certain decision management software tools for use outside of the context of the FICO Decision Management Platform, including:

Rules Management .

The FICO ® Blaze Advisor ® decision rules management system is used to design, develop, execute and maintain rules-based business applications.

The Blaze Advisor system enables business users to propose and preview the impact of changes to decisioning logic, to review and approve proposed changes, and commit those changes to production decisioning, all without demanding IT cycles.

The Blaze Advisor system enables business users to propose and preview the impact of changes to decisioning logic, to review and approve proposed changes, and to commit those changes to production decisioning, all without demanding IT cycles.

The Blaze Advisor system is sold as an end-user tool and is also the rules engine within several of our decision management applications.

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embeds rules management within existing applications;

supports Web Services and service-oriented architecture, Java 2 Enterprise Edition platforms, Microsoft .NET and COBOL for z/OS mainframes;

and is the first rules engine to support Java, .NET and COBOL deployment of the same rules.

supports Web Services and service-oriented architecture, Java 2 Enterprise Edition platforms, and COBOL for z/OS mainframes;

and is the first rules engine to support Java and COBOL deployment of the same rules.

It also incorporates the exclusive Rete III rules execution technology, which improves the efficiency and speed with which the Blaze Advisor system is able to process and execute complex, high-volume decision rules.

FICO’s solution for rules management in the cloud (i.e., Blaze Advisor in the cloud) is called FICO ® Decision Modeler.

Predictive Modeling.

FICO ® Decision Central ™ is a comprehensive offering to help banks and other organizations, including insurance, retail and health care companies, maximize the power of their predictive and decision models and meet stricter regulations for model management.

FICO ® Decision Central ™ is a comprehensive offering to help banks and other organizations-including insurance, retail and health care companies-streamline their predictive and decision model governance and meet stricter regulations for model management.

It complements FICO ® Analytics Workbench™, which enables the user to develop and deploy sophisticated predictive models for use in automated decisions.

This software is based on the methodology and tools FICO uses to build both client-level and industry-level predictive models and scorecards, which it has developed over more than 40 years, and includes additional algorithms for rapidly discovering variable relationships, predictive interactions and optimal segmentation.

The predictive models produced can be embedded in custom production applications or one of our Decision Management applications and can also be executed in the FICO ® Blaze Advisor ® system.

This software is based on the methodology and tools FICO uses to build both client-level and industry-level predictive models, which it developed from countless client engagements.

The predictive models and strategies produced can be embedded in custom production applications, the FICO ® Platform, or one of our decision management applications.

FICO ® Analytics Workbench is available for on-premises or cloud implementation.

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providers of cloud-based customer engagement and risk management solutions.

We believe our competitors are unable to provide the mix of products, expertise in predictive analytics and integration with decision management software, and enhanced customer management capabilities that we are able to deliver.

We believe our competitors are presently unable to provide the mix of products, expertise in predictive analytics and integration with decision management software, and enhanced customer management capabilities that we are able to deliver.

However, certain competitors may have larger shares of particular geographic or product markets than we do.

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In the customer strategy management market, we compete with Experian and SAS, among others.

In the fraud management market for banking, we compete primarily with Actimize, a division of NICE Systems, Experian, Detica, a division of BAE, SAS and ACI Worldwide.

In the fraud solutions market for health care insurance, we compete with Emdeon, OptumInsight, ViPS, MedStat, Detica, a division of BAE, SAS, Verisk Analytics and IBM.

Verisk Analytics and SAS also compete in the property and casualty insurance claims fraud market.

In the fraud and financial crimes market for banking, we compete primarily with Nice Actimize, Experian, BAE Systems Applied Intelligence, SAS, ACI Worldwide, IBM, Feedzai and Featurespace.

In the collections and recovery market, we compete with both outside suppliers and in-house scoring and computer systems departments for software and ASP servicing.

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Primary competitors among outside suppliers of scoring models are the three major credit reporting agencies in the U.S.

and Canada, which are also our partners in offering our scoring solutions, Experian, TransUnion, and VantageScore (a joint venture entity established by the major U.S.

and Canada, which are also our partners in offering our scoring solutions, and VantageScore (a joint venture entity established by the major U.S.

credit reporting agencies).

Additional competitors include CRIF and other credit reporting agencies outside the U.S., and other data providers like LexisNexis and ChoicePoint, some of which also are among FICO partners.

Additional competitors include CRIF and other credit reporting agencies outside the U.S., and other data providers like LexisNexis and ChoicePoint, some of which also are among our partners.

For our “direct-to-consumer” services that deliver credit scores, credit reports and consumer credit education services, we compete with other direct to consumer credit and identity services.

Decision Management Software

Our primary competitors in this segment include IBM, Experian, SAS, Pegasystems and Angoss.

Our primary competitors in this segment include IBM, Experian, SAS, Pegasystems and Gurobi, along with a number of smaller, specialized vendors providing industry-specific solutions.

Competitive Factors

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access to unique proprietary databases;

availability in SaaS or PaaS formats;

availability in SaaS format;

product attributes like adaptability, scalability, interoperability, functionality and ease-of-use;

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more than 200 government or public agencies;

and more than 150 healthcare and pharmaceuticals companies, including seven of the world’s top ten pharmaceuticals companies.

All of the top ten companies on the 2019 Fortune 500 list use FICO’s solutions.

and more than 200 healthcare and pharmaceuticals companies, including nine of the world’s top ten pharmaceuticals companies.

Eight of the top ten companies on the 2020 Fortune 500 list use one or more of our solutions.

In addition, our consumer services are marketed to an estimated 200 million U.S.

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In fiscal 2020, we continued to make progress with our FICO ® Decision Management Suite and FICO ® Decision Management Platform initiatives.

Most significantly for the fiscal year, we have added distinct FICO intellectual property into tools to develop explainable artificial intelligence or xAI.

In addition, we have made many of our software solutions, which were previously available only as on-premises software installations, into SaaS solutions hosted on the FICO ® Analytic Cloud and/or in AWS.

Most significantly for the fiscal year, we added new Platform Service functionality to provide cross-application enablement of centralized services (for example, enabling authentication, provisioning, data ingestion, and similar functions).

We have seen initial success in delivering platform-centric solutions that provide unique value to enterprise clients in tracking and visualizing a buyer’s journey across otherwise siloed offerings.

In addition, we continue to expand the integration of capabilities that make many of our software solutions, which were previously available only as on-premises software installations, into SaaS solutions hosted on the FICO ® Analytic Cloud and/or in AWS.

The FICO ® Decision Management Suite enables clients to use FICO tools, along with rapid application development tools and visualization tools, to quickly develop their own decision management applications and services.

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We have enhanced our predictive analytic capabilities to include the development of machine learning algorithms and artificial intelligence.

FICO has focused on making artificial intelligence explainable to auditors, developers and decision makers.

FICO has focused on making artificial intelligence explainable to auditors, developers and decision makers so that it can be deployed responsibly.

Decision Analysis and Optimization.

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Integrating this technology with our decision management systems has proven to decrease costs, improve staff efficiency, increase customer satisfaction and improve the return from marketing, fraud and collections activities.

Social Network Analysis.

We have advanced technology for identity resolution and social network analysis, which enables users to understand the relationships between their organization, customers, events, and third-party actors.

Businesses can perform real-time searches across their enterprise data to find, match, and link similar entities and uncover hidden relationship between people, places and things.

This technology complements FICO’s capabilities in the area of fraud and marketing analytics.

Cybersecurity.

We have advanced services for cyber risk assessment, which enable users to understand the likelihood their organization or a third-party organization that is their partner, supplier, or potential supplier will suffer a material data breach within a forward-looking 12-month period.

These services are used by organizations to track and monitor their own cyber risk for self-assessment and to assess and monitor partner and supplier enterprises for third-party risk assessment.

They are also used by insurance underwriters to assess cyber risk for cyber breach insurance policies.

Network Analytics.

We have advanced technology for identity resolution and network analysis, which enables users to understand the relationships between their organization, customers, events, and third-party actors.

Businesses can perform real-time searches across their enterprise data to find, match, and link similar entities and uncover hidden relationships between people, places and things.

This technology complements FICO’s capabilities in the area of fraud and financial crime analytics.

Identity and Authentication.

We have advanced technology for digital identity verification and authentication.

As part of a unified digital identity suite, this technology provides a mobile and seamless method for validating identities during the customer onboarding process, and enrolling them as trusted entities for multifactor, biometric and behavioral authentication across digital interactions.

It also helps organizations take a balanced approach to security and the user experience, providing easy-to-use, integrated security across the customer lifecycle.

PRODUCT PROTECTION AND TRADEMARKS

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business