Category : Financial Industry

GreenSky Credit creates positive-sum incentives for everyone involved

GreenSky Credit is quickly becoming one of the most well-known fintech companies in the country. The company has been rocketing towards huge success, surpassing 17,000 retailer partners and doing nearly $5 billion in new loans every year. The secret behind the company’s near-vertical rise to the top of the fintech industry has been a reflection of one thing: GreenSky Credit has found a way to do business where everyone walks away a winner.

Doing what works

Unlike many of its fintech competitors, GreenSky Credit never promised to change the world or fundamentally alter the laws of economics and banking. Instead, GreenSky Credit went after markets where it saw that technology could potentially make for a more frictionless environment, allowing transactions to take place that would not have otherwise materialized because the consumers simply didn’t have the on-hand liquidity to complete the sale.

The first place that GreenSky Credit started focusing in on was the home improvement space. The company’s founder David Zalik had worked extensively in the home renovation industry, and he knew that there was one area where home improvement businesses and contractors had a serious leak.

Homeowners would often severely underestimate the true final costs of completing major home renovation projects. For someone who has no experience in contracting, finding out that installing a high-end stainless-steel kitchen is going to cost $100,000 can be a shocking experience. Unfortunately, this sticker shock often meant that home renovation projects that were on the verge of taking off were getting put on the back burner, permanently.

But Zalik immediately noticed something unique about these big-ticket retail transactions: Even the most expensive home renovation projects, like $100,000 kitchen remodels, usually added more to the value of the home than the projects themselves cost. And this meant that the homeowners were actually losing money, in some cases large amounts, by not being able to complete these projects.

GreenSky Credit, through its instant point-of-sale loans, was able to earn the homeowners serious money. It also gives contractors five- or six-figure jobs that would have fallen through while providing its lending partners with top-end loans.