GreenSky was recently featured on the Motley Fool website in the article “GreenSky: A Better Fintech?” The article was written by Jordan Wathan who reveals that the companies might be one of the best fintech companies on the market. It generates profit by fiding a point-of-sale solution to connect borrowers to local banks. The model is based on fees that helps prevent it from having any growth restraints that are typical in traditional banking.
He believes that the company could see huge growth for years or even decades. The company grew nearly 30% in 2016 alone and created nearly $3.8 billion in loan volume for the partners.
The company functions by acting as a middleman. It connects banks with consumers while also collecting a significant fee. It uses merchants like medical professionals and home improvement companies to bring in the loan volume when they suggest financing.
For example, if a homeowner wants to do an update on the windows but she does not have the available funds to get the money outright, the contractor might suggest that she applies for a loan through the latest FinTech company, GreenSky. GreenSky provides a year of no interest financing to help break the loan into manageable payments.
The contractor is then able to scan the ID card of the homeowner on a mobile device, allowing them to gain the information for the credit application. Then the homeowner simply enters the annual income, SSN, and other information to apply.
GreenSky then analyzes the data to match borrowers with banks partners based on a certain set of criteria. If the application is a good fit, it can approve a credit limit right away. The contractor is then able to speak with the homeowner to assure him that the project has been approved and can even upsell the client with additional work. The homeowner can then approve the project, knowing he will not need to pay off the balance until months later with no interest.
GreenSky developed its product to create a win-win situation for everyone involved. Instead of lending its own money online, it simply connects borrowers with lending banks.