GreenSky Credit has become one of the most successful companies in the fintech industry. The company that couldn’t even find loan backing for its launch back in 2006 has gone on to eclipse virtually every other player in the industry. And its growth and continued success has been the product of its founder, David Zalik, and his unique strategic vision to create the best fintech business in the world.
Only the strong survive
One of the key factors in the success of GreenSky has been Zalik’s realism. While competitors like OnDeck and Lending Club were going after the dregs of the lending market, attempting to magically turn natural weakness into strength by extending loans to people who had no way of paying them back, GreenSky went with the philosophy that strength begets more strength.
Zalik only sought to deal with the best borrowers. In making this strategic decision, he made it possible to quickly bring on board some of the top lenders in the country, including names like Fifth-Third Bancorp, Sun Trust and Region’s Bank. These lenders wanted to pair with GreenSky precisely because the company was doing business with borrowers who, on average, had FICO scores above 760. At the same time, the fact that these borrowers were squarely in the prime category meant that the lenders with which GreenSky partnered were willing to not only issue loans instantly but also on some of the best terms that the industry had ever seen.
The typical GreenSky loan entails no interest or payments for the first full year. After that, higher rates kick in. But the vast majority of the company’s borrowers end up paying their loans back, in full, before the higher interest rates take effect.
And what is perhaps the most spectacular part of the company’s business model is that sheer numbers involved. The firm makes mostly big-ticket loans, usually in the five- or even six-figure range. This has enabled the company to do more than $5 billion in loans each year. And the firm is able to make money both from its retail partners as well as a 1 percent annual carrying fee from its lenders.