Harnessing the power and potential of data is crucial for businesses right now. Effectively utilising data mean that you can can develop stronger connections with customers. It means understanding their needs and preferences in more profound ways. Additionally, it empowers businesses to make informed decisions, driving growth and fostering innovation tailored to market demands. How do you drive strategic business outcomes with data? Fintech Review asked a few questions to Stephanie Covert, EVP and Head of Software at FICO.
Tell us more about FICO. What is your elevator pitch?
FICO is all about decisions. We are helping businesses make data work hard for their organization, powering customer connections and driving strategic business outcomes.
Over the past 60-plus years, our use of Big Data, mathematical algorithms and decision automation have been transformative for our customers and even whole industries. Our analytics and AI have changed the way credit decisions are made, fraud is detected and customers are managed worldwide.
And while our background is largely in the financial services space, our capabilities in areas such as optimization are used across multiple industries. From telecommunications and healthcare to energy and sports. Our platform represents the future of how businesses make decisions.
How can an applied intelligence platform help drive business outcomes?
Essentially, applied intelligence is the collaboration of advanced analytics, decision modelling, AI, and human wisdom. It connects people, processes and technology across an enterprise and activates data with real-time insights to make real-time decisions. Innovators are outpacing their competition by creating an ‘enterprise intelligence network’ that transforms their company. This creates a radical new way to operationalize data-driven decisioning and AI. With responsible AI at the core and the agility to adapt to the changing world.
FICO Platform offers the most powerful and proven foundation for applied intelligence, empowering enterprises to drive the most critical, strategic business outcomes across the customer lifecycle, across departments, across product lines and across geographies. It is uniquely positioned to ensure every action taken drives the desired strategic outcomes, both for the business and for the customer.
What are the most pressing issues for enterprises right now?
Enterprises face a host of challenges related to sluggish economic recovery, supply chain challenges and other issues. To address these, they need to be much smarter about how they use data, how they make decisions and how quickly they adapt. We see the following market trends as critical to this:
Digital Transformation
Hundreds of millions of dollars have been spent trying to optimize customer experiences through digital transformation. In fact, research shows that more than $1.3 trillion has been spent across all industries. However, less than one third of this investment has shown any success in boosting customer satisfaction and retention.
Business Composability
It lets companies break down monolithic applications into discrete components that can be built, scaled, and maintained independently. Business Composability is so powerful that Gartner expects organizations that embrace composability to outpace their competition by 80% in implementing new products and features.
The Promise of the Cloud
The benefits of cloud are long-established. Faster time to market, lower total cost of ownership reduction in support logistics and the ability for greater business innovation
Enterprise Artificial Intelligence & Machine Learning
Despite the potential of AI, as much as 90% percent of AI projects fail to deliver value. This is due to poor data, disconnects between the data science and business teams, and challenges deploying models. Businesses need to overcome these challenges.
Hyper-Personalization
In the age of customer-obsessed businesses, how do you show your customers you care? How do you make sure your decisions and offers are the right ones at the right time? What does the current transaction add to our knowledge of this customer?
How are the new enhancements to FICO Platform that you have recently announced addressing these challenges?
FICO Platform sharpens businesses’ competitive advantage. With an unparalleled depth of insights for applied intelligence, powering customer connections and strategic business outcomes. These innovations break down silos across teams and power the talent force to achieve customer-focused digital transformation. While giving enterprises greater agility and collaboration.
The updated Transactional Analytics feature of FICO’s Decision Management Platform allows enterprises to gain a deep understanding of their customers and business environment in real-time. By leveraging real-time intelligence, data aggregation, profiling and feature management, businesses can operationalize analytics built with FICO’s patented approaches, as well as open-source and third-party models. This enables enterprises to improve their decision-making capabilities and power multiple use cases.
With the Optimization feature, enterprises can experience significant performance improvements and enhanced data visualization. FICO has seen an 11% increase in solver performance over the past year and a 25% increase over the past two years for mixed integer programming.
The Simulation feature of FICO’s platform enables business staff to experiment, test, and learn. Without any negative impact on the customer experience. FICO has made major improvements to the performance of action-effect modeling, resulting in a 70-90% increase in performance. We have also enhanced the component architecture for simulation. Making it more efficient to create new simulation applications and put them in the hands of business users. This empowers enterprises to make informed decisions and explore potential scenarios before implementing any changes.
And the latest version of FICO Platform includes composability and advanced decision technology. It provides unified platform orchestration, highly advanced decision modeling, and flexible dataflow with a rich pallet of applied intelligence tools and services, allowing customers to rapidly deploy across the enterprise to address new and emerging uses cases and scenarios.
What are your predictions for transformation in financial services in the years to come?
The market trends I identified above are going to lead financial services providers to a much more efficient way of working, and a much more holistic approach to customers. We see this today, but it’s only beginning. The barriers that exist today within banks, for example, that lead to fragmented and inefficient decision making, are going to come down. They will have to, because consumers will overwhelmingly choose to work with providers who make more relevant offers to their individual needs. The providers that can’t do this, that can’t adapt quickly enough to new market conditions or economic waves, that can’t use AI appropriately, will go out of business.
I do think AI will have a more central role in financial services, but given how tightly regulated this industry is, any use of AI will have to be highly explainable. There will be no room for “black box” decisions – every decision will have to be explainable to regulators, bank officials and consumers. This is what FICO calls Responsible AI, and it’s critical.
Any other innovation in fintech elsewhere that you are really excited about?
There are three that come to mind as holding tremendous potential. The first is expanding the use of AI and machine learning. These aren’t new technologies, of course – in fact, FICO pioneered the use of neural networks in fraud detection more than 30 years ago — but the explosion in their use over the last 10 years has been remarkable. That excitement brings caution about their use, especially in areas like fair lending, and that’s why FICO dedicates itself to Responsible AI.
We believe blockchain has incredible potential as well. One of the ways we’re using blockchain is to manage and monitor analytic development. This is work done by our AI Innovation and Development team, which uses an immutable blockchain ledger to tracks the development, operationalization and monitoring of ML models from end to end. The blockchain demonstrates adherence to a corporate-wide responsible AI model development standard, with specific requirements, people, results, testing, approvals and revisions. You can audit at any time to see exactly who made which choices. We just won a 2023 Innovators award from Global Finance for this, and we believe this kind of innovation will be critical for financial services firms to adopt Responsible AI.
Finally, Open Banking is already having a transformative effect on banking and fintech and it will continue to grow. Data is the life’s blood of innovation in customer service, and Open Banking will not only give new opportunities to fintechs, it will revitalize established financial services providers, empower customers, and enhance credit inclusion. This is a game changer and we have only just started to see how it will revolutionize financial services.