On Valentine’s Day in 2006, Mark N. Greene was in China, traveling on business as general manager of IBM’s $14 billion Global Banking unit. His wife, at home in New York, got a phone call from the bank that issued one of his personal credit cards: “Good morning, Mrs. Greene. By chance has your husband today purchased $15,000 worth of diamonds in Venezuela?”
Her answer: “Well, I certainly hope so.”
No such luck. As the bank suspected, the transaction came from someone making fraudulent use of the account. “So the charge was declined,” Greene says, “and no harm was done to me.”
An average person would simply be grateful for the bank’s vigilance, having no idea that the fraud-protection software enabling the bank to red-flag the Venezuela charge came from Fair Isaac Corporation (NYSE: FIC), formerly of San Rafael, California, but headquartered since 2004 in Minneapolis. Because he was intimately familiar with the financial services industry, Greene could have guessed, had the subject come up, that Fair Isaac was on the short list of likely enablers.
"Integrating Fair Isaac's products unifies clients' data about their customers across departments: "Hey, This is all the same guy we're talking about."
Now he knows for sure. A year later, Greene left IBM, moved to Minneapolis and, on Valentine’s Day 2007, took the reins as chief executive officer of Fair Isaac, an $800 million enterprise far better known to bankers and lenders—from whom it draws three-quarters of its revenues—than to consumers, who might wonder if Fair Isaac is a friend of Honest Abe or Stalwart John.
In journalistic shorthand, the firm founded in 1956 by engineer William R. Fair and mathematician Earl J. Isaac, is usually called a credit-reporting company. In fact, it provides the software used by the three major credit-reporting bureaus—Experion, Equifax, and TransUnion—to produce the familiar three-digit credit scores called FICO scores (a name that derives from Fair Issac Corporation). Lenders rely on FICO scores to determine whether to OK a loan or some other form of credit; if your score is above 700, you’re considered a pretty good risk. Fair Isaac’s most visible public face is its Web site www.myfico.com, which lets individuals buy their scores from all three major bureaus at once.
But while the credit-scoring system, introduced in 1989, is the company’s bread-and-butter business, it isn’t the whole enchilada. Fair Isaac actually is in the business of “predictive analytics,” the study of past data to find patterns that can be used to forecast future events. Its clients include not only banks, but companies in insurance, telecommunications and, more recently, retail and health care.
