Since the start of the dot-com bubble, tech startups have all too often been heavy on fancy and even awe-inspiring technology but light on actual value creation. Nowhere has this been truer than in the realm of financial tech. Companies that were once among the sector’s most promising are now ash heaps, having been shown to have fundamentally flawed or unworkable business models. Examples include peer-to-peer lenders Lending Club and OnDeck as well as a string of microlenders that have crashed and burned.
But there is one company that has not only weathered the storm but thrived. GreenSky Credit adopted the philosophy of removing friction from the traditional lending space rather than trying to burn the established banking system to the ground. This more modest, even-headed approach has paid dividends. Today, GreenSky Credit is worth more than $4.5 billion and has been growing at phenomenal rates since its founding in 2006.
GreenSky Credit CEO David Zalik says that he never had a revolutionary mindset. Instead, he wanted to create a fintech company with a very specific goal that would create strong value for all players. It was while he was working with home remodeling giants Home Depot and Benjamin Moore that he first realized there was an enormous opportunity for instant lending that existed in the home-improvement space.
Zalik noticed that a large amount of business was being lost by contractors, the largest direct purchasers of home-improvement supplies. When contractors went to pitch a job or bid on work, they often found that the customers, who frequently have little or no contracting experience, had cost expectations that wildly diverged from the final bids. This often resulted in jobs being lost due to severe sticker shock.
GreenSky Credit stepped in with a system that instantly matches customers with lenders, giving full loan approval in as little as 30 seconds. The system enables contractors to close far more sales. But it also enables homeowners to make the improvements they need to be happy with their living environment as well as increasing their home’s value. At the same time, lenders get high-quality loans to pad their books.