Just finishing up their initial public offering (IPO), the following company might be one of the most excellent fintechs ever. GreenSky makes its revenue by providing point-of-sale solutions for connecting consumer borrowers to regional banks. Its model based on fees frees it from most of the growth limiters included with traditional banking. The company has the ability to experience double-digit growth for decades to come.
The organization quietly drove almost $3.8 billion in volume for loans last year to their banking associates, this is an increase of more than 30% from 2016.
The Way GreenSky Functions
GreenSky serves as the middleman for connecting consumer borrowers to banks. They collect a substantial fee during this process. They count on merchants (mainly medical and home improvement professionals) to take in loan requests by offering to finance right where the sale occurs. Imagine the following scenario. A homeowner is looking to put new windows up on a particularly drafty portion of the house, but she can’t pay $6,000 in cash for the project out of pocket. The contractor suggests applying for a loan with GreenSky, so she can have 12 months of no-interest financing for breaking up the investment into small segments.
A contractor can scan the ID card of the homeowner on the spot using a mobile tablet or phone to provide most of the needed data to start the credit request. The homeowner will then enter her annual income, put in her Social Security number and verify additional information prior to tapping to submit the application. The data is then sent to GreenSky behind the scenes.
It will be matched to prospective borrowers based on one of the banking partners’ preset underwriting guidelines. Because the application adequately fit with one of their lenders, they can allow her a limit of credit for up to $8,000 instantly. The contractor lets his future client know that she got approved for at least $8,000. That’s more than what she needs to finance the $6,000 plan. He now has the chance to upsell more work the client might have otherwise declined if it wasn’t for the large credit approval.