GreenSky’s consumer-lending business model creates a win-win situation for loan consumers and lenders. The fintech company offers lenders low-cost customer acquisition and consumers enjoy low financing rates. GreenSky isn’t a lender, the company operates a platform for medical professionals and contractors to offer healthcare and home improvement loans to their customers from banks with a simplified loan process.
How Does it Work?
A contractor or medical professional offering elective surgery can suggest financing through GreenSky. He or she scans the potential borrower’s drivers license and if the person has good credit, he or she is approved for a loan immediately. Instant point-of-sale loans enabled contractors to sell the customer on a big ticket project and the homeowner does not have to wait for credit approval.
How Does GreenSky Earn Money?
The company makes their money from merchants by charging transaction fees (about seven percent) and a small fee for servicing the learn. Since the firm services the loan, the lending bank can make more loans to people with good credit without having to hire more customer service representatives. Borrowers pay the company, not the lending bank, saving banks from processing payments.
Is GreenSky Undervalued?
The company went public in May 2018 (ticker symbol GSKY) and by September 2018, experts valued the stock at $23. The share price hovers at about $20, but an announcement of a partnership with American Express will increase the number of merchants using the platform. This should increase the fintech company’s revenues without increasing their expenses.
Established in 2006, GreenSky has funded 15 billion dollars in loans with more than two million satisfied customers. The company is led by CEO David Zalik, who is also a co-founder. Forbes, Businessweek and the Wall Street Journal reported on Zalik’s success with the Atlanta-based fintech company in 2017.