Unquestionably, the advancement of AI capabilities will change – indeed in many cases, is already changing – the way the world works. People will search for information differently. They will engage with tasks and tools differently.
Workflows, interactions and the way software intersects with other applications will evolve and, against this backdrop, fears have centred around the disintermediation of existing digital business models.
As with any technology shift there will be casualties, so in some cases these fears will be correct; however, there are certain companies we believe have been unfairly caught up in this general sell-off.
One such company is UK-listed credit bureau Experian, which we own in our UK portfolios. The bear case posits that Experian’s position as the world’s largest credit bureau is under threat, as AI will eventually be able to replicate its consumer credit datasets and offer an alternative, cheaper credit score or some new way for global lenders to assess credit risk.
Experian’s share price fell as much as 32% in the first quarter of this year and failed to meaningfully recover even on the publication of a strong set of results in February.
The company is growing revenues at 8%, with solid performance across all divisions – consistent with not only the company’s guidance but also with its pattern of growth over the past few years.
The share price reaction, therefore, appears to suggest that there is a material and imminent threat to Experian’s dominant market position and future growth prospects. There are three key reasons why we do not agree.
Firstly, the core asset at the heart of the business is a collection of hard to replicate datasets of consumer credit information stretching back to the company’s inception in 1963.
These are uniquely broad and deep – Experian collects data on 345 million consumers in the US alone – and constantly updating with new data (1.1 billion bits per month).
This comes from sources that it is impossible for others to access, or for an AI model, however sophisticated, to replicate from nothing. For example, Experian’s business-to-consumer segment offers people the chance to improve their credit scores by supplying the company with ‘permissioned data’, i.e. a view of their spending habits and bill-paying behaviour.
This extremely valuable information feeds back into Experian’s pool of data but this isn’t ‘something for nothing’ – consumers only offer their data in exchange for receiving a benefit to them. Why would they offer their data to ChatGPT for nothing?
Secondly, as a key player in the lending ecosystem, Experian operates in one of the most tightly regulated industries globally, navigating a highly complex compliance and regulatory burden, with expertise built up over decades.
Crucially, Experian’s lending clients also face the same burden and so require a high level of trust in the data, products and services they pay for. The balance here is very much tipped in favour of risk avoidance: lenders recognise that the fines and sanctions they could be subject to potentially amount to billions of dollars.
Thirdly, and most importantly, credit scores are now only a very small part of Experian’s business. These have been overtaken by much more valuable, much stickier software, tools and products, available across a proprietary platform called Ascend, which have been built out of Experian’s differentiated cache of credit data.
The ‘hero product’ is Sandbox, which offers a view across the credit industry using anonymised data, allowing the customer to manipulate and deploy credit, fraud, mortgages, and lending models in an end-to-end, regulatorily compliant way. A key part of the offer is that it’s all under one roof, cutting out the complexity of having to deal with four or five separate vendors.
In our view, the most important figure in the recent set of results was Experian’s 9% growth in North America excluding mortgages, against a credit market growing at just 1%.
This indicates that there is no cyclical tailwind to Experian’s recent growth, and in fact the company is becoming less reliant on credit volumes and instead driven by the sale of increasingly sophisticated products, which are more valuable to customers and more firmly embedded in their workflows.
We note that Experian’s contract renewals are now extending to 4-10 years rather than the historically typical 3-year durations, indicating that the product suite is mission-critical and bringing more and more tangible value to its customers.
Perhaps the most critical overarching point, though, is that many investors seem to view AI only as a risk to the business models of companies like Experian or, indeed, Relx and London Stock Exchange Group.
The best case scenario, it seems, is that the businesses are able to weather the threat of AI – or to put it another way, the best case scenario is that their share prices recover to the levels they were before AI disruption risk gripped.
What doesn’t seem to register is the idea that AI could actually be a tailwind for these businesses, if they are able to harness AI’s power to enhance and take their products to the next level.
We believe that Experian’s products and services could be substantially boosted by the application of AI technologies and recognise that the company has been developing and introducing AI capabilities for some time.
In fact, Experian has been able to demonstrate concrete examples of AI innovation already, becoming available across product sets and platforms. These include ‘Experian Assistants’ within the Ascend Platform; AI-powered model risk management features; strong market adoption of the AI-led Patient Access Curator in Healthcare; and even a consumer-facing agentic AI assistant, ‘EVA’.
Clearly, these are nascent technologies and the company needs to prove that they can become sustainable growth opportunities – as is the case for all developers of AI products.
But we can absolutely see a future in which opinions change and Experian’s ability to layer productivity-boosting AI over its unique dataset has it judged as a beneficiary rather than a victim.
That is why when we look at Experian’s share price today, we are not thinking about how it can return to the highs that it reached in the summer of 2025, but how the company can surpass that by delivering on its potential as a truly world-class secular growth business.
Madeline Wright is co-portfolio manager of Finsbury Growth & Income Trust. The views expressed above should not be taken as investment advice.