While other financial technology companies, like Lending Club and OnDeck, had the idea of burning the traditional banking industry to the ground, GreenSky Credit decided to embrace the old regime and allow it to function with less friction. GreenSky Credit now appears to be the model that is taking hold across the financial tech industry. With OnDeck and Lending Club both experiencing stock price declines of more than 85 percent, it seems that the GreenSky Credit model of pairing existing lenders with merchants who are looking to make additional sales may be the definitive way forward for the fintech industry.
GreenSky Credit founder David Zalik is one of the most reclusive CEOs of a major corporation. The former child prodigy scored so high on the SAT test that he was invited to begin attending classes at Auburn University when he was just 12 years old, completely skipping high school in the process. But Zalik quickly grew bored with academia. A couple years into his studies, he dropped out to form computer assembly company MicroTech. The company proved to be a success, and Zalik sold it for around $5 million a in 1996.
By 2006, at the age of 32, Zalik had made some good investments in commercial real estate and was ready to try founding another company. He had gotten the idea for GreenSky Credit while working on another one of his firms, Outweb, an e-consultancy company. He knew that many businesses in the home-remodeling space struggled to close point-of-sale purchases with customers who had often badly underestimated the true cost of home renovation projects.
GreenSky was able to step in with promotional financing terms that were too good for most customers to turn down. At the same time, Zalik was able to sell GreenSky Credit loans to lenders as a way to bring in far more business from the most sought-after loan customers: prime borrowers. Because the average FICO score of a GreenSky borrower is 760, lenders can rest assured that they will not have to deal with many delinquencies or defaults.
The pairing of traditional lenders with over 17,000 merchants has proven to be a winning formula.