GreenSky Credit has emerged as one of the top-growing companies in the fintech industry. And this has happened amid a collapsing landscape for many of the players within the sector. While OnDeck and Lending Club have crashed and burned in a heap of toxic ashes, GreenSky has soared, reaching a valuation of more than $5 billion and doing about that number of new loans every year.
Making it work by doing what works
The problem with so many of the Pollyannas of the fintech sector was their starry-eyed adherence to business models that had virtually no chance of ever working. While going after social-justice oriented goals may seem appealing for those who would like to change the world, such philosophies rarely turn out well in the ruthless global marketplace.
OnDeck and Lending Club thought that they could change the world too, that they would be the ones who would finally impose rigorous equality among all of the lending industry’s clients. Why couldn’t homeless transients who had never held a job own a 5,000-square-foot mini mansion? And for that matter, why couldn’t people with felony records and no income be extended small business loans on the same terms as prime borrowers? These were the questions that perplexed the founders and executives of many of GreenSky Credit’s wayward competitors. And these riddles would ultimately be answered by the age-old ruthless and decisive method, testing them in the free market. The resulting short-bus cliff dive is a matter of record now.
But David Zalik and GreenSky Credit had a far more sober and clear-sighted view. Zalik decided that GreenSky would concentrate only on proven lending strategies. Rather than trying to reshape the industry to some twisted Marxian image, Zalik would use technology to do more of what was proven to work. By following this strategy, GreenSky Credit was able to quickly impress lenders across the nation, easily convincing them to partner with the company in extending loans to borrowers who, on average, had FICO scores in the 760-plus range.
The result has been a company that gets a 6 percent fee from retailers while receiving a 1 percent annual carrying fee from lenders. The firm’s success continues unabated.