Fair, Isaac Announces Breakthrough in Strategy Science

Sea Change in Decision-Making Process Fuels Profit Gains Across Industries

26 April 2001 (San Rafael, California, USA) — In a move that could mean a dramatic increase in profits to financial services and other industries, Fair, Isaac and Company, Incorporated, (NYSE: FIC), today announced that it has cracked the code for empirically developing decision strategies that maximize profit. The company believes its new technology will fuel a fundamental shift in how mission-critical business decisions are made across a range of highly competitive industries, including financial services, insurance, retail and telecommunications.

Until now, corporations have been challenged in their ability to quickly and effectively distill the mountains of data that underlie their various strategic options and critical customer decisions. These often daunting tasks have been, until now, left to the judgment of an analyst who also faced any number of competing business objectives in their decision-making process. Fair, Isaac's new science will essentially provide unparalleled support to the analytical process of evaluating how a particular strategic decision would play out. It also will clearly identify the single, most compelling strategic option, taking into account all of the company's business goals.

"Fair, Isaac's new decision technology brings the same precision to strategy development that the company introduced to customer behavior assessment via predictive modeling," said Larry Rosenberger, Fair, Isaac's Vice President of Research and Development and Analytics. "We can dramatically increase the value of customer interactions by replacing the guesswork in strategy design with science. This truly represents the next breakthrough in decision technology and customer management," he said.

"Working with several top-tier credit card issuers, we've tested this new science and saw results far beyond those possible with today's standard optimization technology," added Tom Grudnowski, Fair, Isaac's CEO. "The tests we've conducted in the area of credit line strategies — just one application of this science — has shown profit increases of 5-35% over 18 months, and this in an industry that has been applying rich analytics for years. With our new technology, we have cracked the decision code."

Technology Hybrid Replaces Guesswork
Fair, Isaac's technology marries analytic disciplines such as Bayesian networks to advanced, non-linear optimization techniques. In this hybrid technology, a holistic decision model maps the relationship between hundreds of variables — such as customer data, product preferences and features, and profit drivers — to the range of actions available to the user and the business objective, such as maximizing profit. Proprietary optimization software runs data through this model to simulate millions of scenarios. The result is a decision strategy that identifies the exact action to take on each customer in order to maximize profit while meeting the user's business constraints.

A powerful feature of Fair, Isaac's optimization technology is the ability to simulate various "what if" scenarios so that business managers can fully understand the relationship of their actions to their end goals. Using "what if" analysis, the business user can quickly assess the impact of changing product features, business rules and constraints. This produces strategies that work well within a user's operating environment, and enables users to guard against uncertainties such as an economic downturn.

"The era of the 'black box' is over," said Grudnowski. "We believe it is critically important to share the logic and rationale behind decisions. Our intent is to make our corporate clients more knowledgeable about the decision-making process. With knowledge comes greater confidence, and with confidence comes a willingness to take bolder, more decisive business actions. The end-game, we believe, will be better-positioned companies that are rapidly gaining market share and dramatically enhancing their bottom-line," Grudnowski said.

About Fair, Isaac
Fair, Isaac is a global provider of customer analytics and decision technology. Widely recognized for its pioneering work in credit scoring, Fair, Isaac revolutionized the way lending decisions are made. Today the company helps clients in multiple industries increase the value of customer relationships. Fair, Isaac has made the Forbes list of the top 200 U.S. small companies eight times in the last nine years. Headquartered in San Rafael, California, the company reported revenues of $298 million in fiscal 2000.

Some of the information contained in this press release, including statements with respect to the expected results and adoption of the new offering, are forward-looking statements within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially, including the company's ability to recruit and maintain key technical and managerial personnel, the maintenance of its existing relationships with key alliance partners, its ability to continue to develop new and enhanced products and services, competition, regulation changes applicable to the use of consumer credit and other data and other risks described from time to time in Fair, Isaac's SEC reports, including its Annual Report on Form 10-K for the year ended September 30, 2000 and Form-10Q for the period ended December 31, 2000. These forward-looking statements speak only as of the date hereof. Fair, Isaac disclaims any intent or obligation to update these forward-looking statements.