What is GreenSky?
GreenSky is a growing financial technology company that has become one of the top businesses in the fintech sector. The current CEO is David Zalik, who cofounded the company as a new way to allow merchants to provide financial services. They act as a digital matchmaker between consumers and banks, using interactions with contractors as a point of sale for consumers doing home improvement projects.
What is the GreenSky model?
It is important to note that this business does not provide the capital for its loans. Instead, they partner with several banks and coordinate loans and payments. A typical scenario would involve a homeowner looking to do an improvement project. As they meet with a contractor to plan and estimate, that contractor can offer them financing on the spot using GreenSky’s simple mobile app. A scanned driver’s license and minimal financial information are all that is needed to start. Contractors are happy because the instant financing might encourage spending a little more on the project. Consumers are happy because the cost can be spread out over a longer period and many of the company’s loans have a zero-interest period of six to twenty-four months.
As with any financial company, there are risks involved. To minimize these risks, the company uses a vetting process through which only sixty percent of contractors are approved. They also only offer loans to consumers with passable FICO scores.
What is the future for GreenSky?
In 2016, Zalik announced that the company had been profitable for five years with profit margins of 25% and a valuation of 3.6 billion. In June of 2018, they announced a partnership with American Express which should lead to an increase in merchants offering the service. They are looking to expand their market by offering financing for other large, one-time expenses such as: solar panels, children’s braces and elective procedures like LASIK eye surgery. The future looks very bright for GreenSky.