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Fair Isaac (FICO) Expands Tie Up With Network International

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Fair Isaac (FICO - Free Report) recently announced that it is expanding its partnership with Network International to bring fraud protection and credit management solutions to lenders across the Middle East and Africa (MEA).

Network International is a group of companies that provide digital commerce across the MEA region. The group collaborated with FICO back in 2017 to offer its customers FICO Falcon Fraud Manager, which serves more than 2.6 billion payment cards worldwide.

Falcon provides a portfolio of super-supervised, unsupervised, and semi-supervised machine learning techniques that allow cross-channel and real-time profiling of legitimate and fraudulent financial transactions.

The current expansion of the partnership between the two companies will help lenders like retail bankers to protect all retail banking accounts. It is worth mentioning that fraud attacks have risen approximately 70% to 80%, along with the increase in transactions, during the coronavirus-induced lockdown period.

Network International is also installing FICO Blaze AdvisorDecision Management System in its data centers to offer hosted credit management services to lenders. Retail bankers and other credit providers can utilize these services to accelerate operational processes like approving credit applications by controlling risk and managing portfolios.

Fair Isaac’s strategic expansion of partnership with Network International will help the company reduce fraud losses amid rising instances of the same in the lending industry. FICO’s low entry fees for its decision management services mean lenders of all sizes can afford to avail of its services among rising inflation. These initiatives separate the company’s services from its competitors.

FICO’s Partnership With Network International to Drive Top Line

FICO’s shares have fallen 1.9% in the year-to-date period compared with the Zacks Computers - IT Services industry’s decline of 34.6%. This reflects the negative  sentiments among investors as the company’s mortgage origination revenues have been negatively impacted.

In the second quarter of 2022, FICO’s mortgage origination revenues slumped 23% year over year, and the trend is expected to persist in the coming quarter as the U.S Federal Reserve increases interest rates.

Negative sentiments among investors regarding the overall tech sector due to the current macroeconomic condition have hurt the stock price.

The company has been facing increasing competition from the likes of Experian (EXPGY - Free Report) , TransUnion (TRU - Free Report) and Equifax (EFX - Free Report) in the credit scoring business.

Experian, TransUnion and Equifax have formed an alliance that has developed a credit scoring product to compete with FICO’s products.

The integration between the three companies may help them to sell similar products to customers at lower prices, which might impact FICO’s business negatively as there is a risk of losing market share.

To address this issue, FICO has been focusing on diversifying its product portfolio, specifically in the software business segment and expanding its operations internationally to cater to a wider customer base.

FICO recently helped the largest Latin American bank Itaú Unibanco avoid losses of more than $20 million a month with its cloud-based fraudulent solutions.

Itaú has been benefiting from the implementation of FICO Falcon fraud manager systems on-premise, which helps it defend customers’ capital and reduce fraud losses.

With the company expanding its operations in international markets like Brazil and Canada, FICO’s software segment revenues are up 7% year over year as it is addressing the rising requirement for fraud protection services.

The recent strengthening of its partnership with Network International will help the company address a large customer segment in the MEA region, which extends from retail bankers to their customers. The rise in customer base will impact revenue growth positively, which in turn will influence shareholders positively in the long run.

FICO currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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