GreenSky, LLC, is an Atlanta, Georgia-based third-party service provider and program administrator to federally insured, federal, and state-chartered banks that provide consumer loans. GreenSky is not a bank, but instead offers a credit technology platform that helps businesses grow by giving them the ability to offer credit to customers.
GreenSky works with financial partners to provide GreenSky program loans to customers in merchant, provider, and retailer networks nationwide. The company serves customers ranging from the world’s largest and most demanding businesses to small and medium businesses, along with individual consumers nationwide.
In January of 2018, the Wall Street Journal reported that the financial technology (fintech) firm raised $200 million in new equity from Pacific Investment Management, valuing it at nearly $4.5 billion.
In April of 2018, the firm disclosed plans to go public with the company, which operates a lending platform that enables retailers, healthcare providers, and home contractors to offer loans to their customers. GreenSky filed preliminary documents for an initial public offering with the United States Securities and Exchange Commission. The U.S. Securities and Exchange Commission (SEC) is an independent agency of the United States government. The SEC holds primary responsibility for enforcing the federal securities laws and proposing securities rules. It also regulates the securities industry, the nation’s stock and options exchanges, and other activities and organizations, including the electronic securities markets in the United States.
GreenSky filed confidentially for an Initial Public Offering (IPO). An initial public offering or stock market launch is a type of public offering in which shares of a company are sold to institutional investors and usually retail investors as well. An IPO is underwritten by one or more investment banks, who also arrange for the shares to be listed on one or more stock exchanges. GreenSky is ranked among the most valuable U.S. fintech companies established since 2000, and the $1 billion initial public offering marked the largest U.S. Technology IPO of 2018 up to that date.
In recent years, GreenSky raised $560 million from the likes of PIMCO, TPG, and Wellington Management. Its most recent valuation is estimated at over $4.5 billion.
Bank partners have included SunTrust, Regions, and Fifth Third Bank. These financial institutions are the ones that hold the loans on their balance sheets. When the loans are approved, the banks pay a percentage of the balance each year to GreenSky to generate and service the loans using the proprietary GreenSky platform.
GreenSky also has over 17,000 contractors that continuously pitch home improvement loans of up to $65,000 to homeowners. These contractors pay an estimated 6 percent of the loan amount for the opportunity to utilize the GreenSky service platform.
Consumers who apply for a loan often do so on a smartphone and can get a decision within seconds.
GreenSky’s platform gleans customer information by scanning a driver’s license, so consumers don’t have to complete extensive paperwork. Customers add in a couple of other pieces of numeric data, including a social security number. After giving permission for the company to pull credit, the loan application is reviewed.
In interviews, GreenSky’s CEO David Zalik has said that GreenSky has been rapidly successful because the platform technology works with mobile devices and, in the last 10 years, nearly everybody has purchased a smartphone. GreenSky’s business model has proven to be attractive to investors, and the company has reported profits for the last five years.
GreenSky CEO David Zalik
Since founding GreenSky in 2006, David Zalik personally funded the company for the first eight years, taking out $10 million in debt using his Atlanta real estate as collateral. He didn’t raise any outside money until 2014, when QED Investors, a venture capital firm focused on high-growth companies that leverage the power of data strategies, put in seven figures. Other investors in GreenSky to date include Wellington Management and DST Global.
Zalik, a math whiz, began attending college at Auburn University at age 14. Zalik studied mathematics and launched his first business, MicroTech Information Systems, as a college freshman. MicroTech assembled computers and sold them to students. The business took off, and Zalik expanded, selling refurbished computers to corporations and eventually offering software.
For eight years, Zalik ran MicroTech Information Systems out of Auburn, Alabama, and, in 1996, he sold MicroTech for millions, invested in commercial real estate, and founded two new companies, Phoenix and Outweb, an online marketing company. GreenSky is Zalik’s fourth business.
In May 2017, CNBC quoted CEO David Zalik as saying that, since 2012, banks have lent more than $5 billion to consumers via the merchants that use GreenSky’s trademarked platform. The company now has doctor’s offices in its system as well, and collects a fee by charging the banks that facilitate healthcare loans. As previously mentioned in this article, GreenSky is not a bank, but instead provides the platform to service the loans.
In August 2018, shares of Greensky, LLC, (NASDAQ:GSKY) were reported up about 14 percent in response to news that it was partnering with American Express (NYSE:AXP). A press release reported that the lending platform would be able to market its service to merchants who used the American Express network, helping GreenSky gain significantly more merchants and drive loan volume.
The multi-faceted collaboration enables eligible U.S. merchants within the American Express network, and the customers it serves, to access GreenSky’s proprietary point-of-sale financing solutions. Using GreenSky’s platform and technology, home improvement and elective healthcare merchants that accept American Express will be able to drive incremental sales by providing qualifying customers with options to finance large purchases in a paperless environment.
GreenSky and American Express are developing plans to pilot a digital direct loan option with a platform for eligible American Express consumer card members. Customers will be able to search for participating merchants within GreenSky’s network, and finance their purchases at participating American Express accepting merchants of their choosing within or outside of GreenSky’s network.
The direct-to-consumer loans are expected to be offered first in the home improvement category in five U.S. cities.